London calling

New Delhi, Aug. 20 (PTI): The UK has emerged as a prime location on India Inc’s global acquisition map with deals worth $1.2 billion taking place in the first six months of this year, a report says.

British firms have also intensified their hunt for businesses in India and have already entered into acquisition deals worth $12.9 billion.

“The UK is set to be the number one acquirer of Indian businesses and also the prime acquisition target for Indian companies this year, and there is still a huge untapped potential in the subcontinent that UK firms are missing out on,” a report by global financial adviser Grant Thornton said.

The acquisitions made by UK firms here have witnessed a jump of over 41 fold in the last year, while those by Indian businesses in the UK have risen three fold, the report said.

“Strong historical ties between the UK and India, combined with the rapid growth experienced by the Indian economy, had led to some very large deals, although there were still underlying weaknesses in the overall picture,” Anuj Chande, international business partner and head of Grant Thornton’s south Asia group, said.

This year, Indian firms, valued at more than $14.5 billion, were acquired by overseas buyers through 78 deals. Of this, the UK-based Vodafone stole the show with the $10.9-billion acquisition of Hutchison Essar from Hutchison Telecommunications International.

Barring this deal, the value of UK acquisitions is spread over three deals. In the first six months this year, Indian firms have spent $1.2 billion on the UK-based companies against $332 million invested on acquisitions in the US, the report said.

Over 119 international acquisitions were completed in 2006 by Indian firms. They have already made 63 deals in the first six months of the current year. Of these 63, seven were acquisitions in the UK.

This year’s international acquisition patterns have so far favoured raw materials, while the Essar deal in telecom led in terms of value.

However, there are certain reservations among European companies about investment and setting up operations in India. This is apparent from the fact that while the UK acquired 17 companies in 2006, France acquired just seven Indian companies, the Thornton report said.

“The UK is currently in a good position to capitalise on its strong historical and cultural links with India. I will recommend acquisition prospects in India, as the economic forecast continues to look bright,” Chande added.