Continental Europe is next stop for cos on buying spree
Large-cap companies, which have not made any acquisitions so far or only small ones, may also jump into the fray and make acquisitions to get scale and presence in the $108-billion IT services market in Continental Europe, according to a report on...
By TNN |
MUMBAI: The rapid growth of the European market is likely to fuel acquisitions by Indian majors in continental Europe, reports Our Bureau. Large-cap companies, which have not made any acquisitions so far or only small ones, may also jump into the fray and make acquisitions to get scale and presence in the $108-billion IT services market in Continental Europe, according to a report on European IT services by Avendus Advisors, which advises on a large volume of deals in the ICT space.
Revenues from Europe are projected to grow at 60% from 2006 to 2009, compared to the US, which is projected to grow at 35%. Currently, although revenues from Europe are growing at a fast clip, about 75-80% is from the UK. ���We believe there is a rationale for Indian companies to replicate their success in UK in the rest of Europe,��� said Avendus Advisors��� VP Aashish Bhinde.
Unlike the US, Europe and especially the UK, have embraced offshoring, so the sector is a significant vertical for Indian firms, he pointed out. The European IT services market can be broken down into $37.2 billion from Germany, $26.4 billion from France, $18.5 billion from the Nordic countries, followed by Italy and Spain with $14.6 billion and $10.4 billion, respectively.
Avendus expects at least 5-6 transactions in the $100-million-plus size in the current year. Of these, 2-3 will be from large-caps and rest from smaller companies, says the firm���s executive VP Kaushal Aggarwal. In the past, one of the barriers to acquisitions by Indian companies in Europe had been the lower profitability of European IT firms. But, with most of the large Indian firms now close to revenues of $3 billion or higher, a $100-200 million buy will not impact profitability.
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