Sober optimism

Careful business decisions and tightened purse strings have changed the pace and direction of Indian outbound investment

Nandini Lakshman reports from Mumbai

At a time when the global markets continue to be muted and domestic activity is curtailed by slowing growth and a governance crisis, India Inc is treading gingerly in the international arena. Indian companies are still shopping globally, albeit cautiously.

“It’s a good time to buy companies abroad as they are not overvalued,” says Seema Jhingan, a partner at LexCounsel in New Delhi. Even so, Indian companies are in no hurry to match the frenetic deal making of the Chinese. Today, many are driven mainly by business decisions rather than the desire to acquire random assets in the global discount sale.

Earlier, India’s outbound investments were fuelled by a booming stock market and easily accessible financing. Present day M&A transactions, by contrast, are a by-product of business requirements and affordability, a natural fallout of the global economic downturn.

“People have money but they are not willing to make big bets anymore,” says HV Harish, a partner in the India leadership team at the Bangalore office of Grant Thornton. “Earlier companies went overseas with a boom mentality, but now with overleveraged companies there is uncertainty about India itself and they want to evaluate every buy.”