83 Indian Companies Made Acquisitions In US In 2007; 70% of them IT/ITES

India’s US conquest continues with over 73 per cent increase in outbound Indo-US cross border transactions. According to a report released by Vitrus Global Partners, a cross-border investment and advisory firm focused on US and India-based transactions, Indian companies accounted for a total of 83 US-bound acquisitions in 2007.

This accounted for a cumulative transaction value of over $10 billion in 2007. In 2006, there were only 48 transactions. Among the conclusions it draws, about 70 per cent of these transactions were in the Information Technology/ IT-Enabled Service (IT/ITES) sector compared to only 40 per cent last year. The report says that it reflects “the growing pressure amongst IT/ITES companies in India to scale up their size and service offerings”.

What has led to the increase in number of M&As is that there is easy access to the US, the need for acquiring more customers, marketing and distribution channels of the acquired company, low interest rates and tariffs. Besides, there is easy access to external commercial borrowings which provide Indian companies sufficient liquidity for global acquisitions.

The mega deals of 2007 were Hindalco’s acquisition of Novelis for $6 billion, Rain Calcining’s acquisition of CII Carbon for $595 million, Wipro’s acquisition of Infocrossing for $568 million and Firstsource’s acquisition of MedAssist for $330 million.

IT/ITES remains the most acquisitive industry capturing over 51 per cent share of the total US-bound transactions by volume, followed by health-care (11%); chemicals, textiles, and automotive (5% each); metals & mining, jewelry, travel, and media (4% each). Other industries accounted for less than 2 per cent each in terms of volume.

Keywords: India Inc, Acquisitions, IT/ITES, Hindalco, Novelis, Rain Calcinings, CII Corbon, Wipro, Firstsource, Infocrossing