Indian M&A advisors lose out to global peers

Global investment banks are riding head and shoulders above their Indian peers in the mergers and acquisitions game with the likes of UBS, Morgan Stanley, Goldman Sachs and Citigroup winning more mandates for India Inc's cross border acquisitions in the first four months of this calendar year.

According to a Thomson Financial research, no Indian investment bank figures in the top ten list of the M&A deals that was struck this year, which was topped by UBS.

UBS advised Indian companies in striking eight deals so far this year and has a market share of 23.40 per cent, the report said. UBS is followed by Morgan Stanley with six deals this year and a market share of 9.20 per cent.

Another US investment bank Goldman Sachs was ranked third on the list with a market share of 8.50 per cent. The relatively unknown Genuity Capital Markets, which was the advisor to Essar Global's acquisition of Algoma Steel, was ranked fourth in the league table for M&As.

The others in the list are Citigroup, Deutsche Bank, Network Corporate Finance, Lazard, ABN Amro and Credit Suisse, according to Thomson Financial.

"Indian investment banks do not have the knowledge of overseas markets and prospective targets. This is becoming a clear disadvantage for Indian investment banks vis-à-vis global players," said an official from one of the global banks.

Adds Ramesh Sobti, executive vice-president and country executive (India) of ABN-AMRO: "Currently, only global banks have the expertise and ability to bring the buyer and seller together, which Indian investment banks lack at the moment."

He, however, said that the Indian investment banks would play a strong role in the in-bound M&A deals as they are local players and know the domestic market better than their global counterparts. 

In the eight deals that the UBS was the financial advisor, the bank pocketed a cool $100.90 million as fees. Morgan Stanley earned fees of $39.90 million and Goldman Sachs & Co earned $36.90 million.

"A lot of cross border deals have happened this year. So obviously the foreign banks have an edge over Indian banks as they have counterparts in other countries. This trend will continue this year as we see a trend of Indian companies taking over foreign companies," said Gopal Agrawal, vice president, Singhi Advisors.

"We have an exclusive tie-up with Merger Alliance, an association of investment bankers, which has presence in 20 countries across 50 locations. In case of a cross border deal, we would transfer it to our counterpart, who in turn could help us identify the target or introduce us to the company for working out a deal in India itself," he added.

BS Investment Bank was the advisor to United Spirits for their acquisition of Whyte & Mackay for 595 million pounds. Macquarie Bank is advising Tata Power for acquiring Bumi Resources in Indonesia, which has a deal size of $1300 million.

UBS Investment Bank was the advisor to Vodafone Group for its acquisition of Hutchison Essar, as well as for Hindalco's acquisition of Novelis.