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India most popular emerging market for M&As: Report

Jan 13 2014, 21:14 IST
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India has emerged as the most popular destination for Britain's FTSE 100 companies looking to invest in emerging markets, according to a new report released. Reuters India has emerged as the most popular destination for Britain's FTSE 100 companies looking to invest in emerging markets, according to a new report released. Reuters
SummaryTally of Indian deals makes country fourth-largest destination for investment from UK cos.

India has emerged as the most popular destination for Britain's FTSE 100 companies looking to invest in emerging markets, according to a new report released today.

New research by international law firm Freshfields released here claims that companies spent USD 645 billion on mergers and acquisitions in the last decade, with India accounting for USD 31 billion or around 4.8 per cent of total investment.

"India has been more open to international investment in a range of sectors over the past decade, particularly those that are capital-intensive and have needed international expertise. British companies have been keen to capitalise on the opportunity and make the most of established historical, cultural and diplomatic ties," Pratap Amin, chairman of Freshfield's India group, told the 'Daily Telegraph'.

"While Indian deal activity is undergoing a temporary slowdown, partly due to uncertainty over forthcoming political elections, India remains an important international destination for M&A," he added.

The tally of Indian deals makes the country the fourth-largest destination for investment from UK companies.

In contrast, China ranks 14th, Russia 7th and Brazil 10th.

"Growth in China has been largely organic over the past decade and many international companies have gained a foothold in the region by pursuing joint venture models rather than outright acquisitions," explains Amin.

The UK was the primary target for M&A deals, accounting for USD 168 billion, while the US was close behind with ISD 163 billion. Canada ranked third with USD 51 billion, with Spain, Australia, Sweden and South Africa also in the top 10.

In total, the UK and US accounted for more than 50 per cent of all deals, with 81 per cent of investment focused on the top 10 countries.

"The FTSE 100 investments over the past decade have been geographically concentrated, with more than three quarters targeting just 10 countries. When it comes to searching for faster growth, India has tended to be the front runner over the last 10 years," said Edward Braham, head of corporate at Freshfields.

Examples of deals between British and Indian companies include BP's tie-up with Reliance Industries, which was worth USD 7.2 billion. More recently, with India opening up its retail sector for foreign direct investment (FDI), Tesco has agreed a deal with Tata to launch a chain in the country.

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