UK number one destination for Indian acquisitions

Tuesday, July 01, 2008 | Posted by: Grant Thornton
Categories: | Tags: business, India, offshore

The UK is now the number one destination for offshore acquisitions by Indian companies, with Indian businesses spending more on buying firms in the UK than in any other country.

The sale of Jaguar and Land Rover to Tata Motors, which we at Grant Thornton were proud to support, helped to boost the total value of Indian acquisitions to £1.52 billion in the first half of the year, compared with £930 million in the US and £561 million in the Netherlands.

The US is still the number one destination by number of companies acquired however, with 41 American businesses purchased by Indian companies in the first part of 2008, compared with 20 UK companies.

At the other end of the scale from the Tata deals is the purchase of stockbroker Hichens Harrison & Co plc by India’s Religare Capital Markets Ltd for £50 million, demonstrating the diversity of UK companies now targeted by Indian interests.

Flush with cash after a period of rapid economic growth, Indian companies are buying more foreign companies than ever. In 1998 there were a total of 15 companies purchased offshore by Indian companies, in the first six months of this year there have already been 161 acquisitions.

Indian companies are looking primarily to buy brands and established distribution networks. If a UK brand with an international profile is looking for buyers, expect interest from acquisitive Indian companies. This is a nation forging ahead with buy-and-build on a massive scale.

UK companies were also on the acquisition trail in India in the first part of 2008, with £487 million spent on 23 companies, although this is significantly down on last year’s total, a record breaking £9.56 billion in total UK acquisitions in India.

Deals include the acquisition of IL&FS Investsmart Ltd, a financial management company, by HSBC Holdings Ltd for £123 million and Thomas Cook UK Ltd acquiring a majority shareholding in Thomas Cook (India) Ltd for £116 million.

The ongoing interest in UK companies by Indian business people can be attributed to a number of key commonalities including historical ties, strong cross border business links, a very compatible business ethos and the fact that many UK companies were now heading towards bargain territory.

But there is also far greater potential yet for those cash-rich UK companies that are willing to make international expansion a priority. Not only is the Indian economy growing rapidly, but business infrastructure in India is catching up with this growth, not least of which is the depth of skills contained within the workforce as a whole, which continues to attract foreign investment from around the globe.