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Indian Investments Abroad

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Indian Investments Abroad

November, 2012

Brief Overview

India Inc is getting experimental with every passing day and as a result, is increasingly looking to invest abroad to accomplish its motives of resource-hunt or market-hunt or technology-hunt. Investments from India are no longer chasing just stressed assets in the US and Europe or for that matter mining resources in Australia but is largely placing focus on greenfield projects around a larger geography encompassing the middle east, Africa, and south east Asia. Similarly, it's not just the Tatas, Ambanis and the Ruias, who are scouting for opportunities in foreign lands. Corporate groups of all sizes are exploring options outside to get greater access to global markets.

The fact that there is a substantial upsurge in Indian investments abroad can be strengthened from the Reserve Bank of India (RBI) data which states that Indian companies have invested Rs 5.8 lakh crore (US$ 104.23 billion) in the four and half years since April 2007. Of this, almost half - Rs 3 lakh crore (US$ 53.91 billion) - has been invested abroad in the last 18 months itself.

Mr Pranab Mukherjee, the Finance Minister, has reported that while Mauritius is a hot destination for Indian corporate investing abroad, the US and Singapore also hold strategic importance for the same. The United Arab Emirates (UAE) is an upcoming market for Indian outflows.

Key Statistics

  • Overseas direct investment by Indian companies increased to US$ 1.95 billion in August 2012, higher from US$ 1.24 billion in the previous month, through 424 deals, showed the RBI data. Out of this, the corporate invested US$ 482.30 million in equities (against US$ 436.14 million invested in July 2012) while they granted US$ 366.53 million as loans in August 2012. Also, guarantees issued by Indian companies improved significantly to US$ 1.09 billion in August, from US$ 463.47 million in July 2012
  • Meanwhile, merger & acquisition (M&A) and private equity (PE) deal activities witnessed an upheaval in October 2012, with 90 transactions being conducted to the tune of US$ 3.1 billion. One of the major deals was Rain Commodities' acquisition of a 100 per cent stake in Belgium-based coal tar pitch manufacturer Rutgers NV for US$ 95 million from PE owner Triton Partners. Indian conglomerates spent US$ 1.2 billion for acquisition of foreign businesses through 17 outbound M&A deals

Recent Developments & Investments

  • India's second largest private bank HDFC Bank has opened its first representative office in Abu Dhabi to render financial services to a large customer base of non-resident Indians (NRIs) staying in the UAE. The new office will help NRIs open accounts in India and will also offer remittance services, fixed deposits and other related banking services
  • Zuari Agro Chemicals has decided to infuse US$ 800 million to set up an integrated diammonium phosphate manufacturing facility in the UAE with annual capacity of 1 million tonne. The company would build a workshop that would include a power plant, private jetty and desalination plant as a part of the agreement that it has inked with Ras Al Khaimah Maritime City. The company intends to strengthen its foothold outside India through this project
  • SP Jain School of Global Management has launched its third international campus at the Sydney Olympic Park in Australia. Conceiving the idea of making business schools global in their approach, the institute had opened centres in Dubai in 2004 and Singapore in 2006. The management institute aims to provide its students maximum diversity of learning through this international exposure
  • Hyderabad-based GVK Power and Infrastructure Limited has entered an operations and management contract with the Airports Authority of Indonesia (Angkasa Pura Airports), the Indonesian government airport operator. As a part of the contract, GVK would be required to manage non-aeronautical commercial operations at both the existing terminals and the new international terminal of Indonesia's second busiest Bali (Denpasar) international airport, which is currently under construction. The revamped airport is expected to commence operations in the third quarter of 2013
  • Hero Eco Ltd, a division of the Hero group, has partnered with Canadian Electrovaya to consolidate its expansion drive. As a part of the agreement, the Canadian company will "work with Hero Eco to implement lithium ion-powered electric bikes for Hero's markets worldwide." Hero Eco has been recently enhancing its presence in Europe and North America through its overseas acquisition and now it will market lithium ion powered electric bikes in less price-sensitive markets of Europe and North America, expanding its market reach to 22 countries