Good news: India more enthusiastic on buyouts than China

A sagging economy has not affected Indian companies’ appetite for acquisitions, if findings in the report on international merger and acquistions by Grant Thornton are any indication.

Among the BRIC nations, only companies in India and China have shown real enthusiasm to expand overseas, the report says. As much as 29 percent of Indian companies surveyed by the consultancy were enthusiastic about making acquisitions overseas, while in China the figure was 26 percent, the report said. Brazil and Raussia are the other nations in the group

As far as domestic acquisitions are concerned, companies from across all the four nations see value in domestic acquisitions, the report said.

“Clearly, at present businesses in these economies are more focused on expanding domestically, a situation we expect to change in the near future as Brazil and Russia continue to develop international links,” the report said.

Some of the key acquisitions by Indian companies till date include Tata Steel-Corus ($12 billion), Hindalco-Novelis ($6 billion), and Tata Motors-JLR ($2.3 billion).

Merger and acquisition trend in the BRIC economies have been the most volatile over the past five years, the report said. The 2012 survey suggests that overall the BRIC economies are now aligned with the rest of the world in terms of their current appetite for acquisitive growth. How these results evolve in the coming years will be of much interest to businesses and advisers involved in M&A globally, the report said.

The survey has been released at a time when Indian economy is facing a slowdown and rating agencies warning that the country’s troubles may aggravate due to a policy paralysis at the government level. Standard & Poor’s recently warned that India may become the first fallen angel among BRIC and also the first to lose its investment grade status.

“Slowing GDP growth and political roadblocks to economic policymaking are just some of the factors pushing up the risk that India could lose its investment-grade rating,” S&P had said.

The statement had given rise to much political hue and cry in the country. Fitch Ratings had also cut the credit outlook for India, citing similar reasons. The country’s GDP growth had slowed to a near nine-year low of 5.3 percent in January-March and industrial output was near zero in April, according to government data.

Indian corporates have been urging the government to take steps to take forward stalled economic reforms. Industry captains had also expected the Reserve Bank of India to cut interest rates to boost economic activity.