Companies

India Inc keen on keeping investment tap open

KR Srivats New Delhi | Updated on February 19, 2019 Published on February 19, 2019

Companies look to step up M&A, overseas presence, says Baker McKenzie survey

Indian business leaders are bullish on making investments despite the political uncertainty in the run up to the general elections. Over three-fourths of 100 C-Suite executives of mid-to-large-sized Indian companies plan to increase domestic investments by at least 10 per cent in the next two years, a pulse survey showed.

The top executives were also buoyant about the global prospects, with almost two-thirds looking to increase their offshore presence by 10 per cent or more.

Another quarter planned to increase their international investment by up to 10 per cent. This is positive in the face of the currency pressure and geopolitical tensions.

The survey results also showed that Indian companies are increasingly looking towards South East Asia. On the other hand, the UK is no longer a favoured destination.

Destination S-E Asia

In terms of mergers and acquisitions (M&A) involving Indian buyers, there is a clear expectation that deal-making will continue to increase, with seven out of 10 Indian business leaders expecting a significant increase in M&A in their industry.

Though domestic targets are still on top of the list, South East Asia now runs a close second.

The results of the survey were released as part of international law firm Baker McKenzie’s ‘Doing Business Globally’ India week, in which partners from Baker McKenzie across the world converged in the country to meet with various multinationals and discuss their global business aspirations and legal needs.

Ashok Lalwani, Global Head of Baker McKenzie’s India practice, said: “The strong run of deal making and international expansion that has emerged in India in recent years is set to continue. We see some really interesting and ambitious business strategies developing among our Indian clients, as they look to grow, invest and raise capital in various markets around the world.” The US was the number one destination for Indian companies looking for M&A and other investment opportunities outside of Asia (44 per cent of Indian business leaders say the US is a top target), while continental Europe rounded out the top four.

“Increasingly, Indian companies are finding South East Asia a new land of opportunity. We have seen transactions in sectors such as healthcare, insurance, consumer and industrials between Indian companies and counterparties in markets such as Malaysia, Indonesia and Thailand, where there seems to be a good strategic and cultural fit for these emerging Indian multinationals,” Lalwani said.

Though, intra-Asian deal sizes are still smaller than those seen in Western markets, more mega-deals involving Indian companies in the US and Europe are expected to make headlines, he said.

Declining interest in UK

The UK is no longer a preferred investment destination, with just 1 per cent of those responding in India, and indeed across Asia more broadly, looking to the country as a top destination for investment.

This was the lowest of any market included in the survey, with the Brexit factor clearly starting to have a major impact.

Published on February 19, 2019
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