A view from India: M&A market insight

Thursday, October 02, 2008 | Posted by: Grant Thornton
Categories: | Tags: India, investment, India Watch, deals, investors, sectors, CG Srividya

Over the years, India has not only been an important destination for investors but it has also been an active market for international acquisitions. Historically, the UK has been one of the largest investors in India, doing M&A deals across a wide range of sectors.

Indian companies have acquired business worth over US$21 billion in the UK between January 2007 and August 2008 with UK companies acquiring Indian businesses worth over US$12 billion during the same period. The UK has been the largest acquirer of Indian companies since 2005, with deal values of over US$14 billion, contributing to 47% of all inbound M&A deals in India. Similarly, the UK also ranks as the largest outbound destination for M&A deals by Indian companies, with deal values of over US$23 billion and a market share of 38%, from 2005 onwards.

M&A deals between India and the UK during the period 2005-2008 YTD

* January - August 2008
 
The total announced value of deals between India and the UK during the first eight months of 2008 was US$8.29 billion as against US$26.36 billion in 2007 and US$0.74 billion in 2006. The total number of deals between India and UK announced during the first eight months of 2008 was 32 as against 37 and 36 in 2006 and 2007 respectively.

M&A trend analysis

* January - August 2008

Of all the European countries, companies from the UK have been the leading acquirer of India companies. The UK has also been a very significant investment destination for Indian companies. We have presented below the summary of M&A deals between India and UK.

Value in US$ million

Table 1: Indo–UK Deal Summary

* January – August 2008

UK Acquisitions in India

Historically, the UK has been the largest foreign investor in India in the form of M&A with total deal values in excess of US$14 billion averaging approximately US$430 million per deal for the period between January 2005 and August 2008. The UK accounted for approximately 47% of all inbound deal value for the period between January 2005 and August 2008. Over the last three years, there have been some significant acquisitions of Indian companies by UK-based companies, the largest one being Vodafone’s acquisition of Hutchison Essar for US$10.8 billion in 2007. The table below lists some of the UK’s other major acquisitions of Indian companies since 2005:

Table 2: Top UK-based Inbound Deals 2005-2008*

* January – August 2008

Indian Acquisitions in UK

The UK has always been one of the most important investment destinations for Indian companies. There have been 22 outbound deals into the UK during 2008 thus far as compared to 26 in 2007. In comparison to other European countries, Indian companies have made the majority of their acquisitions in the UK. The UK has also been India’s largest destination of outbound M&A activity, with a total deal value in excess of US$22 billion averaging approximately US$242 million per deal for the period between January 2005 and August 2008.

There have been some landmark deals between India and the UK since 2005. The deal between Tata Steel and Corus in 2007 was the largest deal between any Indian and UK company, amounting to US$12.20 billion. To date, the largest deal in 2008 was for US$2.80 billion, between Oil & Natural Gas Corp Videsh Ltd and Imperial Energy Plc.

Table 3: UK-based Outbound Deals 2005-2008*

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