Indian cos looking for bargain prices overseas.

The potential purchase of a controlling stake in LyondellBasell Industries AF, the world’s third largest petrochemical company, by Reliance Industries Ltd marks a return to multi-billion dollar overseas acquisitions by cash-rich Indian companies, tempted by depreciated asset prices of companies affected by the biggest worldwide recession since the Great Depression. “If successful, it could make Reliance Industries India’s first company to have a market value greater than $100 billion,” said Bundeep Singh Rangar, chairman of IndusView, the India-focused cross-border advisory firm in London. Indian companies with a war chest of cash reserves include Oil and Natural Gas Corporation Ltd (ONGC) with reserves of about $5 billion; Reliance Industries with reserves of $4.2 billion; and Tata Sons, the holding company for all Tata Group’s investments, with about $640 million. “Indian companies are on the hunt for bargain basement prices overseas,” said Rangar. “This is a good time for them to buy market share and customers in the West at a fraction of what they would have paid a couple of years ago,” he said. “After a lull of about 18 months, Indian companies have aggressively started looking at foreign assets again. During that time, western economies dipped to low single-digit GDP growth and unemployment surged into double digits amidst the worst banking industry led financial crisis in decades. By contrast, the Indian economy continues to grow at nearly 7% annually amidst growing consumer demand and a robust banking system,” he said. “The fear that India’s economy might follow the West into a recession is over,” said Rangar, adding, “that’s giving Indian companies the confidence to go hunting again in overseas markets where the recession gives them one-in-a-lifetime opportunities to acquire depressed assets.”
SUDEEP SINGH
PGDM IIISEM
SEC-B