Israeli Diamond Portal Reports :India Sets Its Sights Abroad

PRLog (Press Release) – Mar 25, 2008 – Although the financial upheaval in international markets has yet to be resolved, it is interesting to revert to an overview published prior to the storm’s outbreak regarding foreign investments in India and Indian investments abroad during 2007, and perhaps to draw a measure of optimism from it.


From the Israeli point of view, as well as many other parts of the world, India is perceived as an investment opportunity. Grant Thornton’s annual review of mergers and acquisitions indicates that the Indians themselves have identified just as many global investment opportunities: Indian companies invested $32.8 billion in mergers and acquisitions outside of India while the total value of foreign investment in mergers and acquisitions inside India came to $15.5 billion. In addition, the total value of private equity transactions in India reached
$19 million.


The sum total of merger and acquisition transactions (including those in which only Indian entities were involved) and private equity funds came to $70 billion, as compared to
$28 billion in 2006 – an 150% increase. In 2005, the sum total of these transactions stood at $18 billion, so the figures have quadrupled in two years.


According to the overview, this year 405 private equity transactions valued at $19 billion were reported. In 2006, the total value of these transactions stood at $7.9 billion, and in 2005 at $2 billion. The numbers have multiplied by 8.5 fold within two years. Another study published this week by the Indian Chambers of Commerce and Industry estimates that foreign private equity investments in India will reach $48 billion by 2010, with the real estate sector claiming the lion’s share.


The prominent sectors involved in mergers and acquisitions: Steel and telecom are clearly in the lead and together constitute some 50% of all the transactions – worthy of mention is the fact that a single transaction in each of these sectors was responsible for the majority of the investment in the given sector. Real estate, banking, financial services, telecom and infrastructure were the leading sectors in private equity, constituting some 70% of all the investments.


The picture emerging from the survey is crystal clear: The number of transactions and volume of investments are trebling and quadrupling themselves. The reviewers estimated (as stated prior to the upheaval in world stock exchanges) that this trend would continue in 2008, and they predicted that the volume of Indian investment abroad would continue and expand across a wide range of sectors.


What significance does this have for Israel? Among other things, that India must be regarded as a possible source of investment in Israeli companies. In the past year a number of transactions were published including the acquisition of control in the Naan-Dan irrigation company by the Indian JAIN Corporation. Nevertheless, the Indian presence in Israel is not yet widespread and in the area of risk capital it is virtually non-existent. The question is whether in the process of the Indian business sector’s discovery of the world, Israel will succeed in generating Indian interest in its potential despite the current circumstances.


The author is head of the India Desk at the Zissman, Aharoni, Geier and Adi Kaplan Law Firm


By: Advocate Danny Segal