Slowdown no dampener, Indian cos on buyout spree in EU

Indian Inc’s investments in the EU during the current year may not reach the 2008 mark of euro 2.4 billion. But there is a sense of optimism, that Indian companies will re-train their investment guns at the EU in the next six to 12 months, a survey reveals.

Despite the slowdown Indian firms are likely to make an investment of over $100 million in the current year, the survey conducted by the Federation of Indian Chambers of Commerce & Industry (FICCI) forecasts.

The survey was conducted among companies which have invested in the EU in the past. The companies that participated in the survey were from various sectors like auto components, energy, manufacturing, chemicals and Information Technology.  About 40 per cent of the respondents have said that they are open to making fresh investments in the EU in the medium term.

In other words they would consider investing in the EU only in the next six to twelve months or after 12 months.

The respondents expect European markets to recover by then and the situation to stabilise. A majority of such companies have also said that the deal size they have in mind is less than $100 million on an average. This clearly establishes that companies who want to invest are not willing to go for large sized buys. 

The reason for a cautious approach in terms of a longer time frame and smaller deal sizes could be because of the current economic environment but the fundamental reasons for investing in the EU still remain strong, the survey explains.

The rush to acquire companies in the EU reached its peak in 2007 when the total investments reached a high of euro 9.5 billion. This figure dropped to euro 2.4 billion in 2008 according to Eurostat, the statistical office of the European Union.

EU countries emerged as an attractive destination for Indian companies who were seeking  growth in size and scale of operations, increased market access, new customers and better technologies.

DH News Service