NORWAY'S TELENOR BUYS UNITECH'S TELECOM FIRM

Norway-based Telenor, the world’s seventh largest telecom operator with a subscriber base of about 159 million, has bought new-generation telecom company Unitech Wireless by paying Rs 6,120 crore for a 60 per cent stake. The deal puts the enterprise value of the company, which holds a licence for 22 circles and is yet to roll out its services, at Rs 11,620 crore.

Business Standard

First Three Quarters Of Indian M&As Top $26 Billion

--- Cash rich Indian companies’ overseas acquisitions worth $14 billion outpace their global counterparts that made acquisitions worth $8 billion in India

--- Infrastructure Sector Dominates Deal Street with transactions worth $12 Billion

--- Power, Oil & Gas top grosser with merger & acquisitions (M&As) worth $5 billion; Ninth India-EU Summit sets ground for future deals in Nuclear Energy

--- Banking & Financial Services and Pharmaceutical sectors follow with M&A deal values of more than $3 billion each

--- Overall M&As highlight the India-Europe corridor that witnessed 52% share in total cross-border deals worth $22 billion

Cash rich acquisitive Indian companies are set to make new acquisitions as target companies are significantly cheaper now than just six months ago. The cache of cash as an acquisition currency has also increased as global recessionary trends have driven stock prices worldwide to historic lows.

The acquisition of Citigroup's captive Business Process Outsourcing (BPO) arm Citigroup Global Services (CGSL) for $505 million by India’s largest IT services exporter Tata Consultancy Services - the largest buyout of a foreign captive BPO in India; the acquisition of the U.K.’s Imperial Energy Plc, one of the leading oil companies with assets in Russia by India’s ONGC Videsh Ltd, a subsidiary of India’s biggest explorer Oil & Natural Gas Corporation (ONGC) Ltd for $2.8 billion; the pending purchase of Axon Group Plc, the U.K.-based provider of SAP implementation consulting, that has invited rival bids from India’s second largest IT services company Infosys Technologies Ltd and HCL Technologies Ltd., are all manifestations of an M&A binge fueled by large cash reserves held by Indian companies.

Indian companies with a war chest of cash reserves, such as Infosys Technologies Ltd, India’s second largest IT services company, with reserves of about $2 billion; ONGC Ltd with similar reserves; Tata Sons, the holding company for all Tata Group’s investments, with reserves and surplus of more than $2.5 billion, among others, have become active acquirers in the market. This has happened as the US Standard & Poor's 500 Index has tumbled 33 percent in its worst yearly slump since 1937.

Infrastructure Dominates

Infrastructure-related industries dominated mergers and acquisitions (M&As), accounting for 45% of the deals at more than $11.8 billion of the total deal value of $26 billion this year to September.

“The traction in the infrastructure M&As is symbolic of the need for world class facilities, adoption of internationally applicable best practices, experienced global management expertise & technology applications to accelerate growth in the Indian economy. To get that resource base of incremental funds and expertise, part of the capital is expected to find its way in to mergers & acquisitions (M&As).” says Bundeep Singh Rangar, Chairman, IndusView Advisors Ltd, Europe’s fastest-growing Indian mergers and acquisitions firm.

The Indian government has responded to an urgent demand for new infrastructure targeting to spend 9% of the country’s GDP on infrastructure by 2012. Estimates suggest that a third of this investment will come from the private sector, presenting an unprecedented investment opportunity, with corresponding inorganic activity.

“The focus towards the sector is buoyed by the urgency to match global standards. This augmentation is expected to cost and attract investments to the tune of $500 billion over the next five years.” added Rangar

The power sector has been the main stay of the M&As this year within the infrastructure sector, which accounted for $5 billion, or 42% of the deal value in the infrastructure sector. The power sector commanded 19% share in the total M&A value of $26 billion this year compared with about $4 billion last year representing a 7.4% share of the total deal value of $51 billion.

The power sector witnessed two deals worth more than $1 billion – acquisition of the U.K.’s Imperial Energy Plc, one of the leading oil companies with assets in Russia by India’s state owned oil company ONGC Videsh Ltd, subsidiary of Oil & Natural Gas Corporation (ONGC) Ltd for $2.8 billion; and the acquisition of InterGen NV, a Dutch power company by Indian infrastructure company, GMR Infrastructure Ltd.

“The recently concluded ninth India-European Union summit in Marseille, France is expected to further accelerate the M&A activity in the power sector as it’s focus turned towards the potential of nuclear energy to the growth in trade between the two regions, which is targeted to reach €100 billion ($140 billion) over the next five years.” added Rangar

Among the infrastructure sectors, the power sector was followed by telecommunication sector that emerged the second most consolidating sector with $3.75 billion, a share of 32% in the infrastructure sector deal value and 14% share in the overall M&A deal value.

The other sectors which have significantly contributed to the M&A activity are Banking & Financial Services and Pharmaceutical sectors with M&A deal values of more than $3 billion each. These sectors were followed by the Automotive Sector with deal value of about $2.5 billion.

Some of the big ticket deals during the year to September included, the acquisition of

· The U.K.’s Imperial Energy Plc, one of the leading oil companies with assets in Russia by India’s state owned oil company ONGC Videsh Ltd, subsidiary of Oil & Natural Gas Corporation (ONGC) Ltd for $2.8 billion

· Jaguar and Land Rover, the U.K. based iconic marquees of the U.S.-based Ford Motor Company by India’s Tata Motors Ltd for $2.3 billion

· Tokyo-based pharmaceutical company Daiichi Sankyo Company Limited’s acquisition of Ranbaxy Laboratories Ltd, India’s largest pharma company for $2.4 billion

· HDFC Bank Ltd, one of India’s leading private sector banks acquisition of its domestic rival Centurion Bank of Punjab for $2.38 billion

· Investment $2 billion in Unitech Telecom, the telecom arm of India’s second largest real estate developer Unitech Ltd by Italy-based Telecom Italia SpA

Cross Border Deals

“Significant aspect of the M&A activity has been India Inc.’s eyes on global opportunities, which have become more prominent in the backdrop of the global recession.” explains Rangar

India Inc.’s overseas acquisitions (outbound) worth about $13.8 billion, outnumbering the value of acquisitions made by overseas companies in India (inbound) at more that $8.2 billion. Continuing the trend which peaked last year, cross border M&As this year too had a distinct European flavour.

Four of the big ticket overseas deals by Indian companies were in Europe. Acquisitions worth more than $2 billion were of Imperial Energy Plc and Jaguar & Landrover. The deals worth about $1 billion were acquisitions by Great Offshore, India's integrated offshore oilfield services provider of Cayman Island based SeaDragon Offshore Ltd; and the acquisition of InterGen NV, a Dutch power company by Indian infrastructure company, GMR Infrastructure Ltd.

Trade between India and Europe is expected to touch $100 billion by 2010 from current level of $80 billion, according to industry estimates. Acquisitions by Indian companies in Europe accounted for 58% of the total acquisitions made overseas. Europe also accounted for 45% of the inbound deals (deals by overseas companies in the country) in India, led by the acquisition of stake in Unitech Telecom by Telecom Italia.

The U.K. has been the main centre of investments with two of the big ticket deals of Imperial Energy Plc and Jaguar & Landrover by Indian companies. The third deal, that of Axon Group Plc, the U.K.-based provider of SAP implementation consulting, which features a competitive scenario between India’s second largest IT services company Infosys Technologies Ltd and its domestic rival HCL Technologies Ltd, is round the corner.

“Indian companies with their acquisitions of companies in the U.K. are increasingly seeking to harness the size and scale of global operations on one hand and unlock the potential in emerging economies on the other, exhibited by the acquisition of Jaguar and Land Rover, the U.K. based iconic marquees of the U.S.-based Ford Motor Company by Tata Motors Ltd; and the acquisition of the U.K.’s Imperial Energy Plc, one of the leading oil companies with assets in Russia by India’s state owned oil company ONGC Videsh Ltd, subsidiary of Oil & Natural Gas Corporation (ONGC) Ltd.” said Rangar

The U.K. has been the country of choice for overseas investments by Indian companies that invested $6 billion in the country during the first half of 2008. The investments by India Inc. in Britain during the fiscal year 2007-08 has created 3,846 jobs, ahead of its rival economy China that was involved in creating only 898 jobs, according to the U.K.’s Department of Trade and Industry. In terms of the number of new projects, India ranked seventh with 75 new projects, out-numbering China with 59 new projects.

TATA CONSULTANCY TO BUY CITI ARM FOR $505 MN

Notwithstanding the crisis in the global financial system, leading Indian information technology major Tata Consultancy Services (TCS) on Wednesday said it will buy the outsourcing arm of Citigroup for $505 million. In addition to the acquisition, TCS has entered into a $2.5 billion pact with US-headquartered Citigroup to provide outsourced services for a period of nine-and-a-half years

Hindustan Times

TELECOM ITALIA BUYS 49% IN UNITECH'S TELECOM ARM

Telecom Italia has piped Norway’s Telenor to acquire 49% stake in Unitech’s telecom arm. A top Unitech executive confirmed that the two firms are close to reaching an agreement whereby Unitech’s telecom business will be transferred to a new company in which Telecom Italia will invest $2 billion for 49% stake. The majority 51% in the joint venture company will be held by Unitech.

The Economic Times

ETISALAT BUYS 45% IN SWAN TELE FOR $900 MLN

Emirates Telecommunications Corporation (Etisalat) has signed a definitive agreement to acquire approximately 45 per cent of Swan Telecom Private Ltd, one of the companies which had recently got the licence for offering mobile services. Etisalat will pay $900 million for the stake, implying an enterprise value of $2 billion. Swan Telecom holds Universal Access Service Licences in 13 telecom service areas in India, and is in the process of acquiring licences in an additional two telecom service areas.

The Hindu BusinessLine

NINTH INDIA-EU SUMMIT: €100 BILLION OPPORTUNITY

--- Nuclear Energy Assumes Focus at This Year’s India-EU Summit

--- France Takes Lead By Inking Civil Nuclear Cooperation Agreement: Sets ground for €20 Billion Worth of Contracts Over 15 Years


Ninth India-European Union summit in Marseille, France highlighted the growing trade between the two regions, which is set to reach €100 billion ($140 billion) in two-way trade value over the next five years.

Discussions on harnessing nuclear energy took centre stage at the summit against a backdrop of the increasing oil prices and India’s concern with a deficit in power generation from conventional sources.

“There is compelling need for the two economies to come closer and explore joint initiatives for mutual advantage, increased energy production and relaxation of infrastructure bottlenecks,” says Bundeep Singh Rangar, Chairman, IndusView Advisors Ltd, Europe’s fastest-growing Indian mergers and acquisitions firm.

The India-EU summit brings together a region that generates an estimated 30% share of the world's GDP at $16.8 trillion on one hand and on the other, the world’s second fastest growing economy and the EU’s largest emerging markets trade partner grossing $80 billion in trade.

Trade between India and the 27-nation European Union has more than doubled to €55.6 billion ($80 billion) last year from €25.6 billion ($36.7 billion) in 2000. The participation of European companies in building India’s power generation capacity will help achieve the €100 billion ($140 billion) trade target by 2013 set at the India-European Union Summit.


Opportunity Defined

India’s power deficit entails an estimated investment of up to $250 billion by 2012, significantly more than the $44 billion investment the sector has received during the first six months of the current year. To meet the growing demand, the government plans to add 78.57GW over the same period to its existing generation capacity of 140GW. Of the planned augmentation, only 7.26GW has been commissioned. The slow pace of development due to technology and resource constraints calls for investments estimated at $80 billion over the next five years across alternate energy sources such as wind, solar and nuclear energy.

India will become a lucrative market for nuclear energy equipment makers as soon as The United States-India Peaceful Atomic Energy Cooperation Act of 2006 between India and the U.S. gets officially implemented.

Nuclear energy makes up only 3% of total installed capacity in India and its domestic uranium reserves are also limited. India’s Atomic Energy Commission estimates that domestic resources could support only 10 GW of installed nuclear capacity, signifying the potential of a multifold ramp-up.

In mid-2008, Indian nuclear power plants were running at about half their capacity due to a chronic shortage of fuel, according to the World Nuclear Association, an industry body. That situation was expected to persist for several years if the civil nuclear agreement had not been reached. India plans to raise its nuclear capacity 10 times from the present 3GW to 30GW by 2022.

“India-European Union civil nuclear energy cooperation will pave the way for new joint ventures, civil nuclear research and development initiatives and technology sharing arrangements as India looks to combine foreign and homegrown expertise.”

“As India plans to build eight new civil nuclear energy plants, it provides a ready market for global power producers in search of friendly investment destinations.” adds Rangar.

The Beneficiaries

India and France have been exploring such avenues and indicated willingness to share future technology to develop civilian nuclear energy. The two countries took the lead by inking a landmark agreement on civil nuclear cooperation. The agreement will pave the way for French companies such as Areva SA, Alstom SA and Électricité de France (EDF) to win contracts worth €20 billion over 15 years.

Areva has been committed to developing India’s civil nuclear energy initiative for sometime now. That was symbolized by the visit of Anne Lauvergeon, Chairperson of the executive board of Paris-based Areva SA, the world's largest manufacturer of nuclear reactors in January this year along with the French President Nicolas Sarkozy, during his state visit. This was Anne’s second visit to India in less than two years.

Other companies vying to enter India’s nuclear energy market include General Electric Co., the world's second-largest company by market value, Russia's state-owned nuclear company Rosatom State Nuclear Energy Corporation and Toshiba Corp., a diversified Japanese conglomerate, among others.

With the civil nuclear energy corporation agreements coming in to force various Indian companies have shown interest in this field of energy generation, such as Tata Group, Reliance Power Ltd, GMR Infrastructure Ltd, GVK Industries Ltd and state run National Thermal Power Corp. Ltd.

Other Indian companies that will stand to gain are suppliers and builders, such as Hindustan Construction Co. Ltd, Bharat Heavy Electricals Ltd, Larsen and Toubro Ltd, Gammon India Ltd and Godrej & Boyce Manufacturing Co. Ltd.

Merger & Acquisition Deals

Merger & Acquisitions (M&As) in the power sector having accounted for $5 billion, or 19%, of total M&A value of $26 billion this year compared with about $4 billion last year representing a 7.4% share of the total deal value of $51 billion.

The sector witnessed two deals worth more than $1 billion, that of the U.K.’s Imperial Energy Plc, one of the leading oil companies with assets in Russia by India’s state owned oil company ONGC Videsh Ltd, subsidiary of Oil & Natural Gas Corporation (ONGC) Ltd for $2.8 billion; and the acquisition of InterGen NV, a Dutch power company by Indian infrastructure company, GMR Infrastructure Ltd.

INDIA, EU TO COOPERATE IN R&D IN NUCLEAR AND FUSION ENERGY

India and EU decided to co-operate in civil nuclear research and development and enhance exchanges in the field of fusion energy research. The two sides agreed to cooperate in "civil nuclear research and development in a manner consistent with their international obligations," the India-EU Joint Action Plan issued at the end of the ninth India-European Union Summit..

The Economic Times

INFY MAY TOP HCL AXON BID

Infosys is likely to make a one-time move to match or surpass HCL’s offer to acquire London-headquartered SAP consulting firm Axon, but would guard itself from entering into an expensive bidding war..

Indiatimes - Infotech