Date:19/06/2007 URL: http://www.thehindubusinessline.com/2007/06/19/stories/2007061900410200.htm

Back IT, ITeS corner lion's share of outbound investments to US

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They account for 48% of the total deals worth over $2 b in 2006-07

New Delhi June 18 IT and ITeS have emerged as the front-runners in outbound investment from India to the US, accounting for 48 per cent of the total of 48 deals, worth over $2 billion in 2006-07, according to the latest FICCI-Ernst & Young (E&Y) report.

The `Report on Direct Investments in the US by Indian Enterprise' revealed that the hectic pace of outbound M&A activity is driven by increased profitability and cost advantage, increased willingness by corporate India to take on risk, a liberal regulatory stance of the Government, and maturing of the corporate sector in terms of competitiveness.

M&A activities

Terming 2006 as a watershed year for the corporate sector in terms of M&A activities, the report said that the overall outbound deals, or global M&A, valued at $4.3 billion in 2005, crossed the $15 billion mark in 2006. And in 2007, it could well breach the $35 billion level, the report pointed out.

The report projected that outbound deals by Indian companies will increase in number and change in nature. "At present, only the big deals get reported, but there are a lot of small and mid-sized deals in the $20-$60 million range. It is likely that greater activity will be witnessed in this band in the next few years," a statement said. The report noted that an area, which has seen a paradigm shift in the recent past was that of outbound investment from India.