HONG KONG — ABN Amro Holding NV, the top takeover advisor in India last year, plans to hire five more bankers in the country this year on the expectation of more share sales, mergers and acquisitions.
Record economic growth is helping local companies make acquisitions overseas, while foreign firms such as Vodafone Group Plc are buying Indian businesses to increase market share. More Indian companies are also keen to sell shares domestically to capture investor demand in the world’s second-fastest growing major economy after China.
Five hires would be made for the mergers and acquisitions and equity capital markets divisions in the first half of this year, Neil Galloway, a managing director based in Hong Kong with ABN Amro, said in an e-mail on 23 February. The bank has 10 employees in those units in India, said Galloway, who heads mergers and acquisitions and equity capital markets in Asia.
ABN Amro advised seven takeovers involving Indian companies totaling $13.9 billion (Rs61,412 crore) last year, giving it a 35.9% share of the market. Deals included Tata Steel Ltd.’s $12 billion purchase of Corus Group Plc which was completed last month. Deutsche Bank AG was second, with a 35.8% share from 14 deals totaling $13.8 billion.
“We also expect India to continue to grow in relevance” in equity issuance, even as China and North Asia will likely to dominate share sales this year, Galloway said.
ABN Amro will probably keep its headcount in investment banking in Asia constant outside of India, he said in an earlier interview in Mumbai on 14 February.
More Indian companies are likely to buy foreign businesses this year, judging from the number of businesses that have appointed ABN Amro to represent them, said Frank Hancock, a New Delhi-based managing director of the Dutch bank.
About half of these assignments are from companies targeting overseas technology businesses and makers of automotive components, he said by phone from Mumbai today.
“Largely, Indians are buying, whereas two to three years ago, people thought that India was for sale,” he said.
The value of mergers and acquisitions announced this year so far has already reached $40 billion, he said. The value of completed deals last year was about $50 billion, double that of 2005, he said.
Apart from Indian automobile and technology companies, pharmaceutical and energy-related businesses are set to lead overseas takeovers this year, he said.
“We will see more resources transactions as well, as the basic proposition is India lacks energy. So far, India’s lost out to China in that race in grabbing global energy assets.” Government-owned companies including Coal India Ltd. and Oil & Natural Gas Corp. are likely to try to emulate private sector successes in buying assets overseas, he said.
Hindalco Industries Ltd., India’s biggest aluminum maker, hired ABN Amro and UBS AG to borrow $2.4 billion to fund its leveraged buyout of Novelis Inc., the Mumbai-based company’s parent, Aditya Birla Group, said on Feb. 15.
More Indian companies may be available for sale to private equity firms, as family-run businesses change mindsets amid the return of younger generations educated overseas, said Hancock.
Vodafone agreed this month to acquire control of Hutchison Essar Ltd., India’s fourth-largest mobile-phone company, from Hong Kong’s Hutchison Telecommunications International Ltd. Newbury, England-based Vodafone is paying $11.1 billion for a 67% stake.
Share sales in Asia will continue to be driven by China, said Galloway.
In the 10 days before the Lunar New Year break, which began on 19 February in China, ABN Amro Rothschild LLC, a venture with NM Rothschild & Sons Ltd., managed a $175 million share sale for China Mengniu Dairy Co. and a $140 million deal for Harbin Power Equipment Co., China’s biggest maker of power-generation equipment, he said.
Private equity companies are keen on China, though big leveraged buyouts “remain challenged in structuring a transaction and debt package that will give finance providers comfort in terms of debt service,” Galloway said.