It has been nearly four months since Sidharth Punshi, 34, former executive director at Goldman Sachs, joined Jefferies International, a global investment bank and institutional securities firm, as the managing director and country head for India.
In a recent interview, Punshi told Business Standard that despite the tight liquidity scenario and a challenging global situation, Indian companies continue to chase merger and acquisition deals abroad. Excerpts:
What's happening on the M&A deal front, considering that money is tight and there is greater risk aversion?
In the Indian context, let's say that big ticket, multi-billion dollar deals of the kind we saw in the past 12-18 months will be few and far. Small-to mid-cap deals will go through.
Few bankers will be able to close big deals as the financing markets pose a number of challenges. Let us just say that $250-500 million transactions are more likely to be wrapped than the bigger ones.
Since valuations are down globally, are Indian companies in the play for deals?
It is clear that India has a much bigger appetite for acquisitions and Indian buyers are looking around. Only recently Infosys announced its intention to acquire Axon in the UK.
The European infotech sector has undergone a major correction and we are advising another European IT company on its sale and an Indian company, which is currently the lead buyer.
Two months back, a German mid-size company was on the market. There were four companies in the race left in the last round. Two of them were strategic buyers that were Indian. The other two were PEs.
What is driving Indian firms abroad for acquisitions?
Most Indian companies now realise values are very good at the moment and are willing to seize the opportunity.
Interestingly, most of our clients abroad also want an Indian buyer. Indian companies are also looking at buying media properties. In the United Kingdom, newspaper company values have been down by over 50 per cent in the last six months.
Can Indian companies raise the money?
India is not immune to the global financial crisis. However, investors continue to believe in India's economic resilience. While 2008 has seen a significant fall in volume in the FCCB market, we expect this avenue for financing to pick up in 2009.
What about foreign interest in domestic companies?
Our overseas clients want a piece of the action in India. Sectors where we see heightened activity include maritime and shipping, logistics, pharma, oil and gas, clean technology and media.
In fact, we see a lot of activity in the media and general entertainment sector. The telecom sector -WiMax and cable - is also seeing a lot of play. Traditional telecom firms and the new licensees are also on the radar.