Kotak Investment Bank has forged an alliance with GCA Savvian Corporation, Japan’s sixth largest investment bank (by transaction value), to advise Indian and Japanese companies on cross-border M&As between the two countries.
“Japanese companies are looking for opportunities in India. We would leverage our combined experience, local knowledge and relationships to open up M&As for our clients,’’ said Falguni Nayar, MD & CEO, Kotak Investment Bank.
“There is a strong strategic business fit between Japanese and Indian corporates and like-minded companies can derive synergies from each other,’’ she added.
Japanese companies, many of whom have been hit by record-high losses by their exposure to the US economy, are trying to diversify their risks and looking at markets like India, said GCA’s managing partner Akhiro Watanabe.
“There’s a lot of interest in India from Japanese companies. India is one of the fastest-growing countries in the world today. Japanese companies are looking for strategic M&A opportunities in high-growth markets and India has emerged as one of the preferred investment destinations, ’’ said Watanabe.
In June 2008, Kotak-GCA had organised the “India-Japan M&A Seminar” in Tokyo and Osaka to brief Japanese companies on the opportunities in India. The seminars were attended by 300 Japanese companies. Since then, 50 Japanese companies have invited Kotak-GCA to discuss their strategies for India.
This is reflected in the spurt in M&A deals between Japanese and Indian firms that saw Daiichi Sankyo buying Ranbaxy, DoCoMo picking up a 26 per cent in Tata Teleservices, and Matshushita Electric buying out Anchor Electronics. Japanese companies had traditionally followed an export-led model and focused on markets like the US. The recession in the US has exposed this strategy and they realise that it’s too risky to rely on the US, said Watanbe.
Japanese companies have not paid much attention to India so far as physically the two markets were far, the Indian economy was smaller and many Japanese companies decided to focus on China, he said. “Compared to that India has a good talent pool and Indian companies honour their contractual promise,’’ said Watanbe. The sudden interest in India stems from the high losses, which is forcing them to review their long-term strategies.
Between 2006 and 2008, Kotak Investment Banking did 43 M&A transactions involving Indian corporates, second largest amongst peers, with a transaction value of $16.8 billion and was fifth largest by transaction value. This included some of the largest and most complex M&A transactions in India.
