London, 9 August 2007: Britain is likely to be the number one M&A target market for Indian companies this year but British companies are not looking hard enough at opportunities on the subcontinent, said a report published today.
Indian companies bought $1.2 billion worth of UK businesses in the first half of 2007, more than three times the amount spent in any other market, said the survey by Grant Thornton.
And while UK buyers secured more than $12 billion of Indian assets in the same period, the lion’s share of this was the $11 billion acquisition by Vodafone of Hutchison Essar.
UK companies are letting opportunities pass them by, the report said.
“These numbers are strong, but based largely on a few mega-deals,” said Anuj Chande, head of Grant Thornton’s South Asia Group.
“It seems particularly mid-market corporates have not made the most of the potential this rapidly growing market offers.”
“As anyone who has visited India for business recently will attest, the opportunities for investment and M&A are almost unlimited,” Chande said.
Among UK companies recently targeted by Indian bidders are UK steelmaker Corus, which Tata Steel agreed to buy for 6.2 billion pounds in January and which was not included in the numbers supplied by Grant Thornton.
Indian bidders have also looked at assets such as Jaguar and Land Rover, which are being sold by Ford and whose potential buyers include both Tata Motors and Mahindra & Mahindra .
But aside from the Vodafone deal, only three transactions involved UK companies buying Indian businesses during the period, said Grant Thornton, adding that part of the problem limiting such deals is over regulation in India.
“There remain barriers to cross-border M&A, such as regulatory difficulties in the relatively undeveloped food retail sector, in which international companies have failed to gain a foothold due to current legislation protecting small, local retailers,” said Chande.
“This type of legislation does unfortunately impact the overall efficiencies of the Indian economy as a whole.”