Dalal Street may be gripped by fears of a tax on foreign investments but it seems to be full speed ahead on Deal Street.
At the moment , investors have been captivated by unfolding stock market action that has the potential of turning into a full-blown hostile corporate takeover saga.
The drama in this case is being provided by IVRCL and the Essel group. It looks like infrastructure company IVRCL may have just become the object ofa hostile takeover after the Subhash Chandra-owned, Mumbai-based Essel group picked up a 10.19 percent stake in the company through open market transactions.
That's an uneasy situation for IVRCL, since its promoters had just an11.18 percent stake in the company at the end of December. Upping the ante is that Essel has said it wants to hike its stake further, while IVRCL declared that it has no plans of selling out.
Whatever happens next, you can sure there will be some exciting times ahead.
2012 certainly seems to be a good year for mergers and acquisitions (M&As): in the first two months of this year, M&A deals worth $16 billion were announced, which suggests that there could be a continuing shower of deals in the months ahead.
So far, the trend hasn't disappointed.L&T Finance, the financial services are of engineering conglomerate Larsen and Toubro, bought out Fidelity Asset Management Company, the 15th largest mutual fund company in India. While financial details were not revealed, a DNA report saidsaid the worth could be more than Rs 500 crore. In one fell swoop, L&T Finance will take a giant leap from No. 24 to No. 13 overtaking fellow newcomers Axis Mutual Fund and Religare Mutual Fund and some experienced players such as LIC Nomura, HSBC and Deutsche.
It's unlikely that this will be the last deal in the mutual fund industry. UK-based Schroders plans to buy a 30 percent stake in Axis Asset Management Company, according to media reports.The acquisition would allow Schroders to sell its products in India and grant Axis access to the London-listed company's global network.
In other industries, private equity fundAdvent International is reported to be interested in acquiring a majority stake in Hyderabad-based- Care Hospitals Private Limited, a hospital chain. Rakesh Jhunjhunwala, Nimmagadda Prasad, the founder of Matrix Labs and UK-based Ashmore, together hold about 80 percent in the hospital, and the remaining is held by management, according to Business Standard.
The technology industry seems especially keen on using acquisitions as a route to growth.
Cognizant Technology Solutions, for instance, expects its above-industry average revenue growth projections to be partly driven through bigger acquisitions, according to a Mint report. While previous targets comprised companies logging revenues of $20-30 million, the focus will now shift to technology firms that make two to three times more revenue, or in the range of $80-100 million. The company has made about 15 acquisitions in the past decade.
Satyam Computer Services, whose integration with Tech Mahindra recently received board approval,has said it is eyeing acquisitions in Europe and Australia.A DNA report said in Europe, an aerospace company would be the likely target, while in Australia, the company was scouting for companies with operations that would align with Satyam's own operations in Australia. The deals are expected to be in the range of $50-$150 million.
One thing's for sure, there will be more deals to come.
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Updated Date: Dec 20, 2014 07:23:05 IST