India Inc is acquiring actively in south-east Asia. Tata Steel’s acquisition of Singapore’s largest steel company Natsteel grabbed global headlines in 2004.
Sailesh Rao, partner, transaction advisory services, Ernst & Young, explains that securing fuel links has been a key driver for energy companies to venture into these countries, specifically Indonesia.
“More than five acquisitions have taken place in this segment, including the biggest-ever in the region—Tata Power’s acquisition of PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia (Arutmin) for $1.3 billion in 2007. Other players actively acquiring mining assets in the region are Reliance Power, Tata Steel and Jindal Stainless Steel. In the past two years, almost all power developers such as NTPC, Essar Power, Adani Power, JSW Energy, Indiabulls Power and Lanco Infratech were scouting for coal mines in Indonesia.”
It seems like a role reversal for India. Indranil Sengupta, chief economist, India, Bank of America Merrill Lynch, says, “Earlier, SEA was the growth story and India was lagging behind; now, India is leading the growth story. Earlier, Indians were going to SEA in search of jobs and now they are going in search of companies—such is the scale of acquisitions.”
Rohit Madan, research director, VCCEdge, substantiates, “This year, Indian companies have made acquisitions worth $1.22 billion in SEA compared to $1.5 billion in the UK and $2.85 billion in the US. Around 7% of all outbound M&A’s this year were in SEAsian countries.”
Even the services and consumer sector is being tapped in these countries. Rao says, “Tapping into the latest technology in terms of IT outsourcing, software development, internet telephony, etc, is another prominent factor to reach out to the region. Banking, personal care, hospitality, leisure, healthcare and pharma are some sectors that have started to enter the region and we can expect to see more activity. Since 2007, maximum transactions have taken place in the technology sector (21% by deal count), followed by metals & mining (14%) infrastructure (11%).”
In 2008, Aegis, the outsourcing arm of Essar Group, entered Philippines BPO segment through acquisition of US-headquartered PeopleSupport. Essar’s spokesperson adds, “Aegis PeopleSupport currently has over 10,000 employees in Philippines, compared to under 8,500 for the entire organisation at the time of acquisition. We expect our headcount to cross 13,000 by the end of current year.”
Recently, Fortis Healthcare bought private equity TPG’s 23.9% stake in Singapore’s Parkway Holdings for $685 million and later increased it to 25.37%. The Group plans to use the Singapore hospital chain as a vehicle for going global.
FMCG companies are also attracted by the stable economic condition in the region, coupled with access to consumer markets with increasing disposable income. In 2007, Wipro acquired Singapore’s Unza Holdings for about $246 million. Godrej Consumer Products recently acquired Indonesia-based PT Megasari Makmur Group and its distribution company in Indonesia. Megasari Group manufactures and distributes a range of household products, including household insecticides, wet tissues and air fresheners.
Says A Mahendran, MD, Godrej Consumer Products, “It’s a $120-million business. We recently posted a COO to manage the operations. It is early days to comment, but the experience has been good so far.” Comparing the recent acquisition by the group in Africa to SEA, Mahendran says, “They are both good growth markets, SEA looks exceedingly promising and we are looking at the region very seriously.”
FMCG major Marico recently acquired the aesthetics business of Singapore-based Derma Rx Asia Pacific, through its wholly-owned subsidiary, Kaya Ltd.
Says Ajay Pahwa, CEO, Kaya, “SEA is an attractive market for us. Customers in SEA prefer customised skin care solutions, which presents a great opportunity for Kaya.” He adds that the company has plans to expand. Marico IBG (International Business Group) has a growing presence in the region through the acquisition of the brand Code 10 in Malaysia. Marico’s business is focused around fast growing markets in developing and emerging economies.
Indian companies will have considerable interest in the region—Indonesia and Vietnam for coal mines, Singapore for technology and telecom, Philippines for IT outsourcing, and Thailand for hospitality. Going ahead, experts opine, Vietnam might see growing interest. As Madan rounds up, “It is emerging as a competitive manufacturing hub and has also been recently recognised by India as a full market economy.”
Sailesh Rao, partner, transaction advisory services, Ernst & Young, explains that securing fuel links has been a key driver for energy companies to venture into these countries, specifically Indonesia.
“More than five acquisitions have taken place in this segment, including the biggest-ever in the region—Tata Power’s acquisition of PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia (Arutmin) for $1.3 billion in 2007. Other players actively acquiring mining assets in the region are Reliance Power, Tata Steel and Jindal Stainless Steel. In the past two years, almost all power developers such as NTPC, Essar Power, Adani Power, JSW Energy, Indiabulls Power and Lanco Infratech were scouting for coal mines in Indonesia.”
It seems like a role reversal for India. Indranil Sengupta, chief economist, India, Bank of America Merrill Lynch, says, “Earlier, SEA was the growth story and India was lagging behind; now, India is leading the growth story. Earlier, Indians were going to SEA in search of jobs and now they are going in search of companies—such is the scale of acquisitions.”
Rohit Madan, research director, VCCEdge, substantiates, “This year, Indian companies have made acquisitions worth $1.22 billion in SEA compared to $1.5 billion in the UK and $2.85 billion in the US. Around 7% of all outbound M&A’s this year were in SEAsian countries.”
Even the services and consumer sector is being tapped in these countries. Rao says, “Tapping into the latest technology in terms of IT outsourcing, software development, internet telephony, etc, is another prominent factor to reach out to the region. Banking, personal care, hospitality, leisure, healthcare and pharma are some sectors that have started to enter the region and we can expect to see more activity. Since 2007, maximum transactions have taken place in the technology sector (21% by deal count), followed by metals & mining (14%) infrastructure (11%).”
In 2008, Aegis, the outsourcing arm of Essar Group, entered Philippines BPO segment through acquisition of US-headquartered PeopleSupport. Essar’s spokesperson adds, “Aegis PeopleSupport currently has over 10,000 employees in Philippines, compared to under 8,500 for the entire organisation at the time of acquisition. We expect our headcount to cross 13,000 by the end of current year.”
Recently, Fortis Healthcare bought private equity TPG’s 23.9% stake in Singapore’s Parkway Holdings for $685 million and later increased it to 25.37%. The Group plans to use the Singapore hospital chain as a vehicle for going global.
FMCG companies are also attracted by the stable economic condition in the region, coupled with access to consumer markets with increasing disposable income. In 2007, Wipro acquired Singapore’s Unza Holdings for about $246 million. Godrej Consumer Products recently acquired Indonesia-based PT Megasari Makmur Group and its distribution company in Indonesia. Megasari Group manufactures and distributes a range of household products, including household insecticides, wet tissues and air fresheners.
Says A Mahendran, MD, Godrej Consumer Products, “It’s a $120-million business. We recently posted a COO to manage the operations. It is early days to comment, but the experience has been good so far.” Comparing the recent acquisition by the group in Africa to SEA, Mahendran says, “They are both good growth markets, SEA looks exceedingly promising and we are looking at the region very seriously.”
FMCG major Marico recently acquired the aesthetics business of Singapore-based Derma Rx Asia Pacific, through its wholly-owned subsidiary, Kaya Ltd.
Says Ajay Pahwa, CEO, Kaya, “SEA is an attractive market for us. Customers in SEA prefer customised skin care solutions, which presents a great opportunity for Kaya.” He adds that the company has plans to expand. Marico IBG (International Business Group) has a growing presence in the region through the acquisition of the brand Code 10 in Malaysia. Marico’s business is focused around fast growing markets in developing and emerging economies.
Indian companies will have considerable interest in the region—Indonesia and Vietnam for coal mines, Singapore for technology and telecom, Philippines for IT outsourcing, and Thailand for hospitality. Going ahead, experts opine, Vietnam might see growing interest. As Madan rounds up, “It is emerging as a competitive manufacturing hub and has also been recently recognised by India as a full market economy.”
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