Category — Banking & Financial Services

India’s largest bank, State Bank of India has placed its second order with North Canton, Ohio-based  Diebold, Inc. The manufacturer of automatic teller machines is selling the bank 1,700 ATMs, including 1,000 cash dispensers, 600 full-function lobby machines and 60 cash recyclers, Diebold officials said.

The D450s and D422s model ATMs, were specifically designed for the country’s market by Diebold India. The D422 is a cash dispenser and the 450 is a full-service ATM. The 450 has an optional biometric reader should bank officials decided to use it. The ATMs have low power consumption, using approximately 40 percent less electricity than conventional processors.

With the new ATMs, State Bank of India’s ATM network will exceed more than 28,000 machines. Much of this expansion is happening in second tier cities and rural locations. Hundreds of millions of Indians still don’t have a bank account.

What this means

First, that American products continue to be attractive in India’s market. Second that there is a lot headroom left in India’s banking business. ICICI Bank and others continue to expand as well.

Bill Gates has been there several times. George Soros has. Today it is finally Warren Buffett’s turn. He’s on his first trip to India.

The Sage of Omaha told the BBC,  “”I don’t consider India as an emerging market. I consider India as a very big market. We continue to look at large countries like India.”  He did not miss an opportunity to publicly criticize Indian regulations that limit foreign investments in the insurance sector to a 26% minority stake, even though he plans to meet Prime Minister Dr. Manmohan Singh later. No one has accused Buffett of being a diplomat .

Buffett  has incorporated Berkshire India to sell and distribute general insurance products in India. India’s insurance regulator IRDA gave approval for the on-line corporate agency set up by Berkshire in India, The agency, where Allianz holds 20 per cent share, will have a capital of more than $5 million and according to media reports is the first such entity setup by Buffett outside the USA.

Investment bankers are forecasting a stellar year for mergers and acquisitions in Asia following a leap in the value of both inbound and outbound transactions in 2010, according the the Financial Times. The paper said that outbound M&A soared 166 per cent to a record $126.1bn in the region (excluding Japan and Australia), according to Citigroup, with total deal flows including inbound and intra-regional transactions jumping 48.8 per cent to a record $470.5bn.

In India, for example, Mukesh Ambani’s Reliance Industries has spent $3 billion in American acquisitions, mostly of shale oil but it ready to invest another $7-9 billion if they can find good deals. Godrej, Jindal, Tata and other groups have made significant buys earlier.

Meanwhile India’s Business Standard newspaper report a similar trend. Among the 41 per cent of Indian companies planning an acquisition in the next three years, the motivational factors for growth are access to new geographic markets (64 per cent ), acquiring new technology or established brands (58 per cent), building scale (55 per cent) and access to low-cost operations (37 per cent). The report says that there’s been a noticeable shift in preference from last year, when acquiring technology or established brands (57 per cent) was the key factor. This year, there’s been a 20 per cent jump in access to new geographic markets, making it the most sought-after medium for growth.

Matthew Hanning, joint head of investment banking for Asia at UBS in Hong Kong says there are very few acquisitions that Indian companies cannot afford to finance. “If the deal and the valuation make sense, there is no shortage of capital” in that part of the world.

Takeway: Watch out for more global M&A involving Indian companies. This can affect you even if you are not an M&A player. For example your supplier or customer from India could be consumed by a major capital transaction leaving them less bandwidth to focus on you. Alternatively an M&A transaction may suddenly convert an Indian partner into a potential competitor or perhaps into a much better partner. Stay tuned.

Cardiac Science of Bothell, Washington  has agreed to be acquired for $2.30 per share by a medical equipment company based in Bangalore, India. The all-cash deal represents a 10 percent premium to Monday’s closing price of Cardiac Science shares, the companies said Tuesday.

Opto Circuits (India) Limited of Bangalore, which will pay $54.6 million for Cardiac Science, is a developer and marketer of healthcare equipment including pulse oximeters, patient monitoring systems, sensors, digital thermometers, anesthesia and respiratory care equipment, and stents. It reported revenues of $243 million in the latest fiscal year, and sells primarily in the US, Europe and South East Asia. Opto Circuits will fund the purchase through cash on hand and lines of credit.

Opto Circuits Chairman and Managing Director Vinod Ramnani said the deal helps his company venture into the noninvasive diagnostic monitoring and “high-growth” automated external-defibrillation markets.  “This transaction is expected to open many new global markets for Cardiac Science’s products and will greatly enhance Opto Circuits’ product offering and presence in the United States,” Ramnani asserted.

While companies from India are getting ambitious about M&A in the West, they continue to be value-seekers as we see in this deal to buy a distressed medical device company. Earlier this year, the company agreed to replace 24,000 AEDs for U.S. medical facilities and emergency services under a revised recall plan the company has negotiated with the U.S. Food and Drug Administration.  So don’t expect a wave of such buyouts in the next quarter.

The latest version of the 100 most powerful women in the world according to Forbes Magazine is published. Indian-American Indra Nooyi ranks sixth on the list which is quite creditable. But somehow the magazine neglected to rank Sonia Gandhi, the Italian-born president of India’s ruling Indian National Congress party. This is absurd. They also did not rank India’s President Pratibha Patil. While the President is a ceremonial post in India, Patil is clearly wields more influence than at least 25 women on the list.

Two Indian bankers are on the list, but ranked in the wrong order and too far down. India’s second largest bank is  run by Chanda Kocchar of ICICI and she is ranked #92. But she is running her bank better than most US bank leaders today! Ranked ahead of her at #89 is Shikha Sharma, head of Axis Bank.

I can probably think up another four to six women who are more powerful than many of the Forbes 100 list. But let me stop here.