The Hindu Business Line : Investment bankers upbeat on India

Mumbai, Sept. 13 India is largely insulated from the subprime crisis and will continue to see mergers and acquisitions, said investment bankers, speaking at a banking seminar.

“Indian corporates are largely under-leveraged and we will not see any drying up in the financing of large Indian contracts. Pricing of these deals may, however, be higher than what has been in the last few years,” said Mr Tarun Kataria, Head, Investment Banking & Markets, HSBC, speaking at a FICCI-IBA seminar.

He added that the uncertainty due to a global credit slow down could continue for a while. Deals that are stuck will get repriced and restructured.

India may Benefit

India, however, stands to benefit since most acquisitions are cash transactions and there are few leveraged buy-outs.

In 2007, there were more outbound deals in India than inbound ones both in terms of number and value. “There were 121 outbound deals for $27.98 billion while there were 51 outbound deals for $27.98 billion. This includes the Tata Steel-Corus and Hindalco-Novalis deal,” said Mr R. Sridharan, MD and CEO, SBI Capital markets

Around 57 per cent of merger and acquisition deals (in terms of value) involved Europe and 34 per cent North America.

Investment bankers believe that the liquidity position in Asia, particularly India, is comfortable.

“However, globally, there is a backlog of $300 billion worth of loans, which are waiting to be syndicated,” said Mr Nalin Nayyar, Managing Director-India investment banking, Lehman Brothers.

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