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Global Reach India’s Outward Foreign Direct Investment, 2007–08 Source: RBI / Domain-b.com India’s Actual FDI Outflows, 2003–2008 ($ millions, U.S.) Source: RBI / Domain-b.com Manufacturing is currently the leading category, making up 43% of the total, and includes electronics, fertilizers, agricultural products, and gems and jewelry. The energy, pharmaceuticals, and automotive sectors also figured prominently in M&A activity. Non-financial services, accounting for 11% of the total, included telecom, software development, and medical services. Traderelated sectors included textiles, garments, chemicals and petroleum products. 226
M&A, Venture Capital, and Private Equity: A Thriving Investment Climate M&A activity has also grown. Large firms pursuing scale and global reach through M&A have included Tata Group, Bharat Forge, Ranbaxy Laboratories, Oil and Natural Gas Corp. (ONGC), Infosys, Wipro, Essar, Reliance Group, Apollo Group of Hospitals, Bharti, Airtel, pharmaceutical and health care provider Nicholas Piramal Ltd., and Suzlon Energy. But smaller firms have also taken advantage of investment opportunities. In what promises to be essentially a reverseoutsourcing deal, in August 2009, Reliance Big Entertainment invested $325 million for a 50% stake in Steven Spielberg’s Dreamworks SKG, gaining a share of the profits and the right to distribute its products in India. Of 86 M&A deals valued at more than $35 billion in the U.S. during 2007, a third involved small and mid-sized Indian enterprises. Their combined value was up dramatically from $15 billion worth of such deals in 2006 and $4.3 billion in 2005. A March 2008 Ernst & Young study, commissioned by the Federation of Indian Chambers of Commerce and Industry (FICCI), suggested that direct investment in the U.S. by 46 Indian enterprises—72% of them small and mid-sized firms, and nearly half in the IT sector—created an estimated 65,000 jobs in 2007 alone. A weak dollar has heightened the appetite of Indian firms for U.S. acquisitions with an eye toward expanding markets, achieving global scale, acquiring management expertise and contacts, and accessing specific technologies, processes and talent quickly. Where India’s domestic market may provide few opportunities to grow through acquisitions, M&A focused on the U.S., Europe and other Asian markets offers Indian companies the opportunity to acquire technologies, access new management pools, and increase their product lines. Bay Area Connections Throughout the previous sectoral analyses in this report—in financial and legal services, semiconductors, IT services, real estate, energy, computer networking, and the Internet—we have highlighted India investments undertaken by specific firms, in the context of their overall India presence. Here we attempt to provide a sense of cross-border venture capital, private equity, and M&A activity, in both directions. An August 2006 Evalueserve study identified 23 VC and 21 private equity firms in the U.S— many of them based in San Francisco and Silicon Valley—that had significant existing or planned India investments. Original research done for this report in 2007 identified 54 Bay Area firms with some level of cross-border, India-related investment in all categories. Comprehensive statistical data on cross-border investment is not readily available, but it is possible to piece together from interviews and secondary research a flavor for investment trends as they relate to California and the Bay Area. The California Public Employees’ Retirement System (CalPERS) registered with SEBI as an FII in July 2004, committing $100 million to the Indian equities market. CalPERS’ three emerging market fund managers made the decision to invest after India’s successful April 2003 rollout of automated procedures to settle equity trades within two days of execution—a standard known as T+2 rolling settlement—down from three days in 2002 and 5 days in 2001. The pension plan’s initial strategy focused on mid-cap stocks over a 3-10 year 227
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The Bay Area Council Economic Insti
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Bay Area Council Economic Institute
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Acknowledgements This report was co
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Nanocity: A Sustainable Urban Visio
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Global Reach Tech Immigration Explo
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Global Reach Import numbers reflect
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Global Reach 1992 by a group of Ind
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Global Reach This is occurring even
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Global Reach Venture firms from the
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Global Reach Leaving more “secure
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Global Reach region’s Indian comm
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Global Reach Which model—the Chin
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Global Reach new workers annually a
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Global Reach exclusive wholesale su
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Global Reach suits and protests. Bl
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Global Reach Farmers and Laborers G
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Global Reach shuttle program and co
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Global Reach A Broad Cultural Bridg
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Global Reach president of the Inter
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Global Reach Reflecting the Bay Are
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Global Reach Chapters multiplied wo
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Global Reach Padala has been active
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Global Reach An ITT Graduate, Raj J
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Global Reach At the height of the t
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Global Reach Currently, ISB’s one
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Global Reach Back in the Bay Area,
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Global Reach • identify, prioriti
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Global Reach spectively. As with mo
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50 Global Reach
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Global Reach in California on tuiti
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Global Reach • The Gobhind Behari
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Global Reach initiatives, among the
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Global Reach Davis faculty and scho
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Global Reach Discussions between UC
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Global Reach • the Satyajit Ray F
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Global Reach A. Privett, S.J, and a
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Global Reach PanIIT, an umbrella or
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Global Reach by a state-owned phone
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Global Reach Top export cargoes mov
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Global Reach At the same time, Indi
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Global Reach California almond expo
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Global Reach The 2007 high in expor
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Global Reach for Chennai, which is
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Global Reach through franchising ag
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Global Reach In those eight sectors
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Global Reach In 1993, as an alterna
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Global Reach convenience); as of ea
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Global Reach Only three Indian bank
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Global Reach B: Legal Services Key
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Global Reach Market Opening Under t
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Global Reach management track recor
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Global Reach Ropers Majeski Kohn &
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Global Reach ever commercial disput
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Global Reach yond the 15% it held.
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Global Reach C: Semiconductors “W
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Global Reach A long-awaited package
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Global Reach • Intel, Tata Consul
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Global Reach and AMD’s Geode proc
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Global Reach The Cadence Design Con
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Global Reach customers—Broadcom,
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Global Reach D: Software/IT Service
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Global Reach India’s large indust
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Global Reach The Bay Area exerted a
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Global Reach IDC India forecasts 16
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Global Reach • A 15% appreciation
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Global Reach Faced with rising cost
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Global Reach assistance. The added
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Global Reach • billing, energy au
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Global Reach next-generation call r
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Global Reach with corporate machine
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Global Reach analysis for the finan
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Global Reach Tapping the Universiti
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Global Reach Finding New Niches Gup
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Global Reach As noted elsewhere in
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Global Reach applications, and then
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Global Reach Bumpy California Roads
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Global Reach global IT services and
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Global Reach It’s a long way from
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Global Reach can only be done by U.
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Global Reach Besides Cisco, Autodes
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Global Reach A major casualty of th
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Global Reach India has, to a degree
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Global Reach involving more than 25
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Global Reach Global credit tighteni
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Global Reach new promise for e-comm
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Global Reach Nanocity is now in the
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Page 258 and 259: Global Reach Dr. Douglas Crawford C
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Global Reach “India’s First PAC
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