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November 27, 2005

Indian M&A market booming

The mergers and acquisitions market in India is currently experiencing a significant boom, according to the managing director of investment banking at JP Morgan India.

By CBR Staff Writer

Vedika Bhandarkar said that in the first nine months of 2005, M&A activity in India totaled approximately $13bn, compared to between $4.5m and $5m in the whole of 2005. The figures include deals made by Indian companies and by global firms looking to acquire in the subcontinent.

Major deals announced in India so far this year include the takeover of BPL Mobile Communications Ltd and BPL Mobile Cellular Ltd by Hutchison Essar Ltd for approximately $1.2bn, and Vodafone Group Plc’s acquisition of a 10% stake in Bharti Tele-Ventures Ltd for INR 67bn ($1.5bn).

The Indian IT services sector has seen a steady flow of M&A activity this year. For example, Tata Consultancy Services Ltd, the industry’s largest provider, has made two acquisitions so far. In October, the company paid $26m for Australian banking software provider Financial Network Services Pty Ltd, and then a month later it purchased Chilean business process outsourcing provider Comicrom SA for $23m.

In April, Secunderabad-based Satyam Computer Services Ltd made its first overseas services acquisition when it paid an initial $23.2m UK-based consulting and systems integration firm Citisoft Plc.

Non-Indian IT services firms that have looked to boost their presence in the subcontinent through acquisitions include Greenwood Village, Colorado-based Ciber Inc, which bought Knowledge Systems Pvt Ltd for about $2.5m, and offshore IT services provider Covansys Corp, which in June paid $3m for BPO firm Fortune Infotech Ltd.

Speculation continues to link European IT services giants Capgemini SA and Atos Origin SA with major acquisitions in India. Both companies have captive development centers in the region, but have been unable to match the expansion rates of rivals such as IBM Global Services and Accenture.

Earlier this year, Capgemini was named as a potential bidder for the 35.6% stake in Mphasis BFL Group Ltd that was previously held by Baring Private Equity Partners. The share was valued at around $200m including exit price premium, but Capgemini’s interest was ended by alleged valuation differences.

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