New York: Tata Sons Ltd, the Mumbai-based holding company that has investments ranging from auto makers to hotels, said the credit crisis presents it with opportunities to make acquisitions in the US and Europe.
As access to capital tightens, competition for assets from competitors will dissipate and prices may fall, Alan Rosling, executive director of Tata Sons, said in an interview on Tuesday in New York.
Bullish outlook: Alan Rosling says having a ‘long-term, stable, private shareholder’ in the Tata holding company means publicly traded firms within the group may find it easier to access capital for acquisition. Brendan Smialowski / Bloomberg
Rosling said he’s concentrating on the US and Europe because there are fewer opportunities in the developing world. The closely held group already has stakes in companies that operate in the US, including Tata Steel Ltd, Eight O’Clock Coffee Co. and Tata Consultancy Services Ltd.
“It may well be that businesses become available and there are fewer buyers, or the prices have come down,” he said of potential targets.“If you’re looking at M&A (mergers and acquisitions), it has to be the US and Europe where opportunities may come up.”
Having a “long-term, stable, private shareholder” in Tata Sons means that publicly traded companies within the Tata group may find it easier to access capital for acquisitions, he said. Tata Sons’ businesses employ 350,000 people in 96 companies across six continents, according to its website. The 140-year-old group had sales of $62.5 billion (Rs2.86 trillion today) in 2007-08, 61% of which came from outside India, the company said.
While the group’s companies with operations in the US work to identify acquisition opportunities, they must also prepare for any potential “downside”, because the outcome of the credit crisis remains unclear, Rosling said.
Lehman Brothers Holdings Inc., the third largest US securities firm, declared bankruptcy last week, while the US government has had to bail out US mortgage insurers Freddie Mac and Fannie Mae and insurance company American International Group Inc. A $700 billion plan proposed by treasury secretary Henry Paulson to aid surviving US financial institutions has yet to be passed by US lawmakers.
“There’s no doubt that things will be tougher in the next few months than it has been in the last three, or four years,” Rosling said. “It’s unprecedented, what we’re living through. Anyone who tells you they understand the full implications are either lying, or they’re stupid.”