India Inc may step up overseas buys: Bindra

NEW DELHI: Outbound acquisitions by India Inc are set to increase substantially, said Jaspal Bindra, chief executive officer (Asia), Standard Chartered Bank. The current global environment offers huge opportunities for Indian entrepreneurs, particularly in knowledge-driven verticals such as entertainment, education and information technologies, he said.

Talking to ET, Mr Bindra, who is appointed as group executive director from January 1, 2010 and will become the member of board of directors of Standard Chartered Bank, said: “We will see more outbound transactions by India Inc than what we have seen in 2007.” This is primarily because globally consolidation is set to increase over the next few months. After the 2008 financial crisis, many governments have bailed out banks, which may not be the case of the companies, he added.

In multibillion deals, India Inc had consummated some of the global giants, such as Chorus and Novelis, in 2007. Standard Chartered Bank was involved in some way with most of these high profile deals. The bank was also advisor to Bharti Airtel for its proposed strategic alliance with South African telco MTN that failed due to regulatory hurdles. Mr Bindra said some of the Indian companies engaged in education sector or are planning to foray in it, are likely to acquire overseas institutes. Even in the infrastructure sector, some of the Indian companies may go overseas for shopping design and engineering companies, he added.

On the issue of limited availability of resources either in form of equity or debt, Mr Bindra said: “Going forward, Indian promoters will have to do trade-off between size and ownership. If they want to have increased participation in the global market, they will have to dilute their holdings to strategic players or private equity firms. While there are opportunities and funds are also available, they need to have intent to seamlessly synergies the two.”

On the issue of India growth story, Mr Bindra said that in both short and long term, growth is visible and robust. However, there are issues in the medium term of three to five years. “There are some issue in terms of reforms such as labour and land reform. More importantly, the availability of funds,” he added.

To sustain the growth rate of 7-8%, India needs huge capital, said Mr Bindra and added that there were chances that interest rate could go up once demand for funds increase. This, in turn, may impact the viability of long gestation projects such as infrastructure and power, among others. More importantly, the avenues for long-term capital, which is critical to fund infrastructure sector, he added.

Mr Bindra said Indian financial sector was far more robust that any part of the world in term of credit prudence. “India has demographic advantage, which is still not well understood worldwide,” he said.