Piramal Healthcare is planning to invest $1 billion in the US in a couple of years, mainly to buy companies with interests in aerospace, bio-pharmaceuticals, defence and information management sectors. The company, which has businesses in areas from pharma to real estate, already has 1,000 people working in the US, said chairman Ajay Piramal.
Piramal was speaking on the sidelines of a Confederation of Indian Industry event on investing in the US. ?Most of the growth in the US will be inorganic,? he said.
Piramal, who is cash-rich after selling his generic drugs business to Abbott Laboratories for $3.2 billion in 2010, did not disclose more details of the proposed investment. ?We are still working out the plans; it is too early to comment on any possible targets for acquisition,? he said.
Piramal joins diversified Indian groups like the Tata Group, Reliance Industries and Mahindra & Mahindra that have shown interest in defence and aerospace both in India and abroad in the past three years.
Mahindra & Mahindra had purchased Australian light aircraft maker Gipps Aero in 2009, while the Tata Group signed a deal with helicopter maker Sikorsky in 2009 to make helicopter parts in India. Reliance Industries plans to enter the sector and signed a memorandum of understanding with Dassault Aviation in February.
Piramal?s investment in the US, however, does not signal a lack of confidence in India. ?The domestic market is looking positive and I believe that the Indian growth story will continue,? he said. ?But currently, our focus is on the developed markets.?
Piramal had said at the end of 2011 that he does not find any ?worthy? investments in India. ?If you are an honest businessman in India, it’s very difficult to start up anything,? he told Associated Press in December.
Indian companies have invested $7.1 billion in the US until 2010, the 27th largest foreign direct investment. Most of these investments are in wholesale trade, technical services and information industries.
?Indian companies have much more to offer than just be a BPO,? says Piramal. ?In addition to capital, we also provide access to one of the fastest growing markets.?
?India has emerged as one of the fastest growing investors in the US, primarily because of the support of local and state governments in the country,? said B Muthuraman, vice-chairman Tata Steel and president, CII.
On Thursday, shares of Piramal Healthcare closed 0.58% higher at Rs 456.36 on the BSE.
Meanwhile, the American commerce secretary John Bryson urged Indian companies to invest more. ?The strong and balanced growth in our trade relations must also characterise investment relations between the two countries,? said Bryson, speaking at the same event.
?The US government wants to sign a bilateral investment treaty with India to promote more Indian investments. A strong bilateral treaty will help provide stability to Indian investors,? he added.
The US is also working to bring down the corporate tax in the country to make it more investor-friendly, unlike Indian government whose tax proposals are hurting foreign investors. The Union Budget proposed to retroactively tax transactions done overseas for assets held in India and allow tax authorities to examine transactions structured to solely avoid tax under General Anti Avoidance Rule or GAAR.
?The economics of all institutional foreign capital do not make sense,? says Rahul Bhasin, managing partner at Baring Private equity fund which manages $1.3 billion to invest in Indian companies.
?America?s corporate tax code is complex and needs to be reformed,? said Bryson. ?President Barack Obama is trying to bring down corporate tax to 28% from 35% at present and we will push for that change to be adopted this year.?