investments by Indian companies will exceed $16 billion this year. With this deal India will most likely top all other Asian countries at the biggest in investor in the UK for the fiscal year 2006-2007.” said Bundeep Singh Rangar, chairman of IndusView, an India-focussed cross-broder advisory firm. The Tatas have made a string a takeovers — including that of Daewoo bus unit, Natsteel of Singapore and Tetley of the UK — abroad.

However, if the joint bid by Reliance Communications, Blackstone and three other equity funds for the takeover of Hutchison Essar Ltd fructifies, the deal could even dwarf the Tata-Corus deal. As Hutch has been valued at $13-14 billion, a 100 per cent buyout will involve an equivalent amount. Though investment banking sources are already talking about a $14 billion bid by Reliance-Blackstone, Reliance has not made any official comment on the takeover so far.

On the other hand, the Corus takeover amount is expected to touch $10 billion if one of the bidders revise the offer again. “Although it remains unclear whether the bidding will continue, Tata Steel evidently intends to finance the difference between its latest and initial bid with additional debt, potentially resulting in further downward pressure on the ratings compared with the original offer,” said Standard & Poor’s credit analyst Anshukant Taneja while putting Tata Steel on the rating watch. The entry of private equity funds has added to the takeover fever. There have been a few significant management buyouts in the recent past in the Indian PE industry. Some examples are KKR’s acquisition of 85 per cent in Flextronics Software Systems, Actis’ acquisition of significant stakes in Nilgiris, Phoenix Lamps, Paras Pharma etc and Navis Capital Partners’ acquisition of the Nirulas.

... contd.