Modi magic: Nearly 40 Indo-Japan deal queries since PM's May victory

Mumbai: Indo-Japanese deal enquiries have increased manifold since Prime Minister Narendra Modi’s visit to Japan and 35-40 Japanese companies are looking at the domestic market after his May victory, boutique investment bank Singhi Advisors has said.

The queries since the May victory are worth around $1.5 billion, according to a back of the envelope calculation.

“Modi’s recent visit to Japan has generated a lot of interest from Japanese investors in the domestic market. Mid-size deals worth $35-40 million each, involving investments or outright buyouts in infrastructure, power, building materials, healthcare and even consumer sectors have increased deal appetite tremendously,” Singhi Advisors’s Founder and Managing Ditector Mahesh Singhi told PTI.

[caption id=“attachment_91053” align=“alignleft” width=“380”]  Narendra Modi. PTI[/caption]

“Since the Modi win, 35-40 Japanese firms are looking at the domestic market,” he added

He said excluding large deals like Ranbaxy-Daichi and RelCap-Nippon deals, as many as 38 deals under $50 million ticket size were closed during the past two years, which involved either Japanese companies picking up a controlling stake or a complete buyout.

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Singhi, who visited Japan after Modi’s visit, said that his company has long been focussed on the Indo-Japanese corridor and is working on two deals at present.

Since the Prime Minister’s visit, deal enquires have jumped manifold, he said.

“We are working on two deals in the building materials space and power equipment sector. The Japanese are largely looking at picking up controlling stake in some companies in these sectors which have a ticket size of around $30 million each,” Singhi said.

However, he said that the pharma sector is unlikely to see any deal since the sector has taken a beating after the Ranbaxy-Daichi deal which soured after the conclusion of the agreement. But on the positive side, there is lot of interest in the healthcare and consumer sectors now, Singhi said.

Going forward, Singhi said that he would increase his coverage of Japan by sending one of his senior employee to work with a Japanese investment banker which is a member of the Merger Alliance – an exclusive international club of over 20 investment bankers.

So far, Singhi has closed five Indo-Japanese deals such as the sale of Bhoruka Aluminium to YKK AP Inc, which is the world’s largest zipper maker, for $22 million in August 2011; and the Wadia Group firm Sunmica selling its laminates business to Aica Kogyo which is the largest player in Japan for $20 million in March 2013.

Other deals included the joint venture deal between the Sunways Group with the leading over the counter drug firm Rohto Pharmaceuticals for $17 million in November 2013 and Surat-based Span Diagnostic selling its in-vitro diagnostics business to the Japanese major Arkray Inc for $20 million in February this year.

The city-based boutique investment banker also worked on the Camilin-Kokuyo joint venture deal.

PTI