August 2008

Is India buying up the UK?

India seems to be flexing its muscle in the global village, with the latest reports reflecting that it has spent a total of £1.52 billion (pounds) on acquiring businesses in the first half of this, making the UK its number one hunting ground.

This is according to Karen Geldenhuys, MD of ICT-focused recruitment company, Abacus Recruitment. “Indian companies are also increasingly eyeing South Africa, with Tata Motors open up shop here, as well as its principal company buying a stake in SA’s alternative fixed line operator, Neotel. Satyam, one of India’s top five technology companies, also opened in SA recently and has been awarded a contract to provide part of the IT services for the 2010 Soccer World Cup. India is really flexing its muscles.”

Returning her focus to acquisitions in the UK, Geldenhuys said that, according to Grant Thornton’s monitor of the business transactions between the nations, the UK is the number one offshore location for Indian outfits looking to buy.

The of Jaguar and Rover to Tata Motors pushed the total amount spent by Indian firms in the UK ahead of the US (£930m) and the Netherlands (£561m).

But India is also still buying US businesses. Interestingly, it bought 41 in total, which is more than the 20 UK companies India businesses acquired.

A recent press article in UK-based on-line publication, www.ContractorUK, reports that buyers from the sub-continent were eyeing various targets, “though some UK sectors, like IT, remain likelier to receive offers because of historical, Logistical and labour factors”.

Recently, for instance, HCL technologies, India's fifth largest software exporters, bought UK-based BPO provider Liberata Financial Services. The price tag was £21 million over the next year.

Geldenhuys said India’s economy continues to grow robustly – currently growing at a rate of 9% a year. “Some India firms have a lot of extra cash and they are looking for places to invest.

“At the same time, economic pressures in the UK have caused local companies’ market values to drop. They are ripe for the picking.”

However, UK firms were not entirely left out in the cold. They spend £487 million buying 23 companies. But this was down on last year’s record of £9.56 billion (pounds).