JP Morgan expects surge in India Inc.’s appetite for overseas acquisitions
As Indian companies eye global acquisitions, manufacturing sector is in the spotlight. JP Morgan executives highlight how stronger balance sheets and valuable currency are enabling Indian firms to make significant international moves.
Indian companies are increasingly looking to acquire assets overseas to gain access to technology and bolster manufacturing assets, senior executives at investment bank JP Morgan told Mint.
“India outbound could be quite relevant in the years to come, especially in a three-to-five-year timeframe. There are live conversations that are starting to happen with target companies that our clients have tracked historically," said Nitin Maheshwari, co-head of investment banking at JP Morgan in India.
Maheshwari said global assets have become more affordable and Indian companies are able to fund acquisitions “because they have a stronger balance sheet and a valuable currency (such as listed securities)".
Maheshwari, head of mergers & acquisitions (M&A) and financial sponsors for India, and Ravi Shankar, head of technology, media and telecommunications and consumer & retail for India, were named co-heads of investment banking at JP Morgan in India on 27 January.
“Capital markets are enablers of M&A – meaning, for an Indian buyer looking at an asset, their ability to pay top dollar is higher if they trade at high multiples," Shankar told Mint.
Several Indian companies have already looked overseas to make acquisitions. RPG’s Ceat acquired Camso in a $200 million acquisition last year.
Over the last few months, IT services giants Infosys acquired The Missing Link, an Australian cybersecurity firm, and MRE Consulting, a technology consultancy in the United States, in April. Wipro has also struck multiple overseas acquisitions in recent years.
In January, Intas Pharma acquired US-based Coherus Biosciences in an over $558 million investment.
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Focus on manufacturing
The growing importance of manufacturing globally is likely to make this segment ripe for M&A, the executives added, noting that Indian firms are either buying for skills, and technology, or looking at some geographic presence to diversify their business globally.
“The big opportunities for India Inc globally are on the manufacturing side – this could actually reshape supply chains for global companies and actually drive a lot of traffic to India," Shankar said.
Maheshwari added that this could be segments such as speciality manufacturing, auto, auto components and pharmaceuticals.
“None of the Indian pharma companies have leverage and they have the ability to go out and buy specialty products, and continue to move up in the value chain," he added.
The Indian manufacturing sector has been driven by the global corporate requirement to invest in diversified supply chains. Several large tech firms have set up manufacturing hubs in India to meet the global demand. US tariffs in manufacturing sectors could also induce Indian firms to acquire assets in parts of the US.
Also Read: Time to re-imagine Indian manufacturing from the ground up
In recent transactions in India, JP Morgan was advisor to SMBC in its acquisition of a stake in Yes Bank.
JP Morgan also advised Walmart on its acquisition of Flipkart in 2018 and subsequent $3.6 billion fundraise. It also advised the $3.1 billion sale of Hexaware by Baring Private Equity Asia (now EQT) in 2022.
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