India companies get bolder with outbound acquisition plans

In recent posts, I have reported how India continues to grow at an unprecedented pace despite the global slowdown. Indian companies are leveraging this growth streak to strengthen their corporate portfolios, particularly by making outbound acquisitions in western markets.

In April-June 2010 quarter the number of acquisition transactions involving Indian companies was roughly the same as one year ago, 155. But the actual  dollar volume shot up 482 percent to $16.9 billion from just $3.5 billion a year ago. More important is the composition of those transactions: a year ago only 6 percent involved overseas partners but this shot up to over 50 percent in the last quarter.

Western executives need to watch this trend closely since India continues to forge a path distinct and different from other developing countries as its national wealth grows and as its companies become more ambitious globally.

The oil and gas sector produced about a third of the aggregate deal value during April–June 2010. The largest deal of the quarter was led by Indian public-sector companies  - Indian Oil Corporation, Oil and Natural Gas Corporation (jointly with Petroliam Nasional Bhd and Repsol) who acquired a 40% stake in Venezuela’s Empresa Mixta for $4.8 billion. Mumbai-based, Reliance Industries acquired an interest Marcellus shale deposits via Atlas Energy ($340 million) and via Pioneer & Pek LLC for Eagle Ford Shale ($266 million) in Pennsylvania and Texas respectively.  Other prominent transactions were Hinduja Group’s acquisition of Luxembourg-based  KBL European Private Bankers for $1.7 billion. The technology sector witnessed maximum activity with 22 deals, followed by industrial products (15 deals), financial services (14 deals), infrastructure (13 deals), and metals &mining (11 deals).