India: Moving away from inbound to outbound investment

Carl Nisser – ConsultantSJ Berwin LLP – London3130087

Overview of Presentation

• Major issues in India’s internal market

• Competition – a base for stronger Indian companies

• Changing investment trends

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Major issues in India’s internal market

• Democratic strength

• Growth rate of 9 percent overall and 15 percent in IT

• Increased education reflected in improving literacy rates – total adult population (15 +) 61.3 percent. Youth (15 - 24) 73.3 percent

• Entrepreneurial spirit

• Rule of Law and Competition Law

• Huge financial market

• Military R&D and production

• Sustainable energy production and nuclear power generation

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Competition – a base for stronger Indian companies

• India is one of the most competitive countries for production of steel, auto components, pharmaceuticals and chemicals offering low cost high value products

• Software and services such as call centres, accounting, graphic art, customs application developments, back offices for multinational entities

• Local versus foreign lawyers

• Governmental interference

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Changing investment trends

• From back office to main stage

• From agents and distributors to direct presence with a footprint in Europe through M&A’s for strategic reasons

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Changing investment trends (cont’d)

• Cross border deals by Indian firms

2007 $35 billion

2006 $15 billon ($21 billion?)

2005 $4.3 billion

2000 $1 billion

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Changing Investment trends (cont’d)

• Indian firms acquired 180 firms in EU and US in 2006 and 130 in 2005

• 210 M&A’s by Indian companies expected in 2007 and about 400 in 2010

• Mittal Arcelor; Tata Tetley; Tata Corus

• Bollywood now shoots in UK, diamond trade in Antwerp etc.

• Presence of Indian immigrants in the EU

• Private Equity from small to large

• 40 percent of acquisitions by Indian companies are in Korea, Hong Kong and Singapore and 60 percent in EU and US

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Changing investment trends (cont’d)

• Total M&A’s into India in 2006 $3.5 billion whilst private equity deals $7.5 billion

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Many thanks for listening.

Carl Nisser

Consultant – SJ Berwin LLP

10 Queen Street Place, London EC4R 1BE

Tel: +44(0)20 7111 2396

E-mail: carl.nisser@sjberwin.com

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