As economy slows, cos will sell more assets, say bankers

There are three main drivers behind this emerging paradigm, says Frank Hancock, the managing director and head of corporate finance at Barclays India.

First, on the demand side, India remains a key strategic destination, alongside China, for global foreign direct investment or FDI. “Large companies continue to look for the opportunity to build or buy themselves a presence.”

On June 26, Coca Cola chairman and chief executive Muhtar Kent said the company will invest R28,000 crore by 2020, one sixth of its global investment to build bottling plants and supply chain.  

The American company wants India to be among its top five revenue earners from seven now. In July, Swedish furniture retail chain Ikea said it would invest Rs 10,500 crore in next 15-20 years in India to build retail chains.  

“In general, their appetite remains unaffected by what they regard as essentially short term political and economic headwinds,” says Frank, whose bank has a pipeline more of sell mandates than buy.

“In 2010, Barclays, second topper in merger and acquisitions volume, executed eight mandates of which seven were buy sides with one a sell,  whereas within our current pipeline, more than 90% of our mandates under execution are sell side - a complete reversal of trend.” Barclays

... contd.