News: 'India Inc outshines foreign firms in M&A'

(FE 03/04/2006) New Delhi - With 35 outbound deals, Indian companies have outshone their foreign counterparts when it comes to acquiring companies overseas, an Assocham study has said.

The first three months of 2006 saw 133 merger and acquisition (M&A) deals in sectors like IT and ITeS, banking and financial services, automobiles, pharmaceuticals, fast-moving consumer goods (FMCG) and media, the Assocham Eco Pulse study said.

The foreign companies, however, were ahead of the Indian companies as far as acquiring minority stake in companies was concerned.

Out of the 30 inbound M&A deals, only seven involved a majority stake in the domestic firms by overseas entities, whereas out of the 35 transactions overseas, Indians acquired 100% stake in as many as 32.

“Financial services, pharmaceutical and manufacturing sectors like auto components are likely to see continued high levels of M&A activity with international interest in India as an outsourcing base as well as growth in the domestic market,” Assocham president Anil K Agarwal said.

The sectoral breakup revealed that IT and ITeS sector led the list with 20% of total M&As and pharmaceutical sector was next with 14%, closely followed by banking and financial sector with 12%.

Others in the list included automobile sector (10%), textiles (5%), telecom and media (both 7%).

The IT and ITeS sector had the highest share in terms of total M&A operations during the period. Of a total of 131 deals, 27 were from the

IT sector, out of which nine were outbound.

The Indian pharma sector is likely to touch $30 billion mark by 2010 due to increased outsourcing and a large number of drugs going off-patent.

Merger and consolidation in this sector are driven by the growing research and development capacities. The banking and financial services sector saw a total of 17 deals. Domestic M&A activity has picked up in the Indian banking sector this year.