It’s been a while since our last newsletter, and when they say a week is a long time in politics, we would say a week is a hell of a long time in economics too. Rumors of country or corporate debt exposure become real-time flash headlines in the press, coupled with economico-wizards analyzing what happened and what should be done, who should fork out and who should tighten their belts. Whole countries are on trial by international media and their experts, blogging and twittering and pronouncing verdicts, contributing to wild speculation and frightening the horses into the bargain. Presidents, Prime Ministers & CEOs clearly don’t have the solutions so heads roll; who’s next for the guillotine? Maybe we should restrict economic media coverage to 15 minutes per day! Keep calm and carry on, as they say in the army!
India has continued to show growth during the financial turmoil, and through our Indian colleagues we have been looking attentively at the opportunities in this exciting market. Please contact us at info@advent-uk.com or Skype: adventuk with your strategy for entry into the Indian market and we will match you to our Indian target companies.
Bullet figures: IMF estimates 6% growth in 2011 & GDP 9%. PE returns are between 12% - 25% p/a. The Indian stockmarket has generated investment returns of over 15% per annum for the last 10 years and experts expect this rate to increase in the next decade.
Debt finance – Indian midcap companies are looking for development capital from foreign financial institutions. Profile Indian midcap companies have T/O average of 50M Euros, well managed, well positioned in their market, good order books and delivery, and with strong growth. Sectors are varied and include education, transport, manufacturing, construction, logistics, food processing, health care and retail. All these sectors are showing huge growth.
Joint Ventures – Similar Indian companies are looking for JVs with foreign companies to develop their existing markets. For example, we have an Indian company quoted on the Indian Stock Exchange with orders for railway rolling stock looking for a JV with existing design and manufacturing expertise interested in bringing finance and technology expertise for their new factory.
Private Equity – Indian PE firms are looking for foreign PE firms willing to JV or invest directly into their PE Funds. The Indian PE funds are mainly investing directly into Indian midcap companies with similar profiles as above. Here is our Indian PE market report.
Key drivers of foreign investments in India:
1. Relaxing regulatory barriers of foreign investments in India & good tax breaks.
2. Consistently impressive GDP in excess of 9% driven by:
- Huge capital inflow
- Spurt in demand generated by growing Indian middle class with higher disposable incomes, resulting in higher purchasing power.
- Human capital and competitiveness in high-growth sectors, with one of the best higher education systems in any emerging market and widespread knowledge of English.
- High number of people with university degree.
- Abundance of entrepreneurial talent and high self-confidence.
- Very high growth in sectors like Telecoms, ITES, Financial services, Real Estate, Infrastructure and Manufacturing.
3. Political stability and other favorable macroeconomic variables such as:
- Sharp rise in foreign reserve due to strong exports, it overtook Euro 136 billion mark in February 2011
- Strong domestic savings and investment rates further enhanced India’s reputation as one of the favored investment destinations.
The above factors coupled with excess liquidity during the economic boom world over from 2003 to 2007, and pressure to diversify internationally in the globalization era, has resulted in radical growth of foreign investments in India.
Russia
More stable now that the economic crisis has shaken out the excess, midcap companies still looking for Western funding/JVs, positive GDP but reduced to 4.8%.... Middle classes have strong demand for goods, services, better hotels etc. Stronger macroeconomics than China all round, politics are stable “à la Russe” and Government trying to be more investor-friendly, new Russian Investment Fund hunting foreign Sovereign Funds with $ for $ proposition (you put yours and we put ours) , WTO entry planned soon etc.
Exciting times!
