Clear skies ahead?

As India Inc rediscovers its globetrotting ambitions, outbound investors face complex regulatory challenges at home and overseas

George W Russell reports

Corporate India is developing a fresh enthusiasm for international acquisitions after a lull in 2009. From mining to mobile phones, Indian investment is pouring in to both the developing and developed world as companies seek new markets, require new technologies, identify a complementary merger or merely spy something shiny at a bargain price.

Indian companies leapt to prominence in 2006 with a number of landmark billion-dollar deals such as Tata’s acquisition of Corus and Jaguar Land Rover and the UB Group’s purchase of Whyte & Mackay. But by 2009, Indian deals had become scarce. According to London-based consultants Dealogic, the volume of India-related outbound M&A was only US$11.4 billion in 2009, well down from US$18.2 billion in 2008.

Financial experts suggest that international asset prices fell so low in 2009 that deals were actually prevented from going through. “Deals never happen when valuations are much below their implicit value,” Ajay Garg, managing director of Mumbai investment bank Equirus Capital, told a recent conference. “As the global market improves, the targets are coming close to their implicit value and this is helping the deals get through,” he said.