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Indian IT firms on international acquisition spree
Cash rich corporates eyeing up UK and US targets, says report

By Andy McCue

Published: Tuesday 16 May 2006

The number of overseas acquisitions made by Indian IT companies has risen sharply in the last four years and is set to increase further, according to a new report.

Since 2002 Indian corporates have acquired 101 international companies across all industry sectors in deals worth a total of more than £2.9bn - with £1.1bn of the deals in the first four months of 2006 alone.

International manufacturing companies are the biggest acquisition target for Indian companies, followed by technology, IT support services and business process outsourcing, according to the report from corporate finance house Close Brothers.

One example of this was the acquisition of UK software company Incat International for £53m by India's Tata Technologies last year.

Factors that have contributed towards Indian corporates turning their targets on international assets include the fact that many of them are cash rich. This coincides with a period marked by liquid debt and buoyant private equity markets.

Companies in the UK and the US are the main acquisition targets, accounting for more than half of the 101 deals since 2002.

This trend is unlikely to abate any time soon, according to Alka Bali, director at Close Brothers.

He said in a statement: "Even if there are global market corrections in the coming months, we do not expect this level of Indian acquisitions to abate. The momentum in the growth of the Indian economy is too advanced for this trend to reverse."