US acquisitions by Indian cos at nearly $4bn in H1 2010

US-bound acquisitions by Indian companies in the first half of 2010 have exceeded all projections, with twice the deal volume and eight times the deal value of 2009 first half transactions.

Indian companies made 23 US-bound acquisitions with an aggregate value of over $3.8 billion in the first half of 2010. IT/ITES sector remains the most active in acquisitions accounting for over 65 per cent share of the total US-bound transactions by volume, followed by oil & gas and mining (10 per cent ) each.

In comparison to small-size and distress related transactions last year, the current year's transactions were substantially large and growth oriented. Six acquisitions in the period were over $100 million in size compared as against none last year.

Most of the transactions had an earn-out structure, in which a portion of the deal value was carried over for payment on achievement of future milestones as in Reliance's acquisition of its shale assets and Mphasis' Fortify acquisition.

The robust growth and surge in demand for natural resources in India coupled with high debt-to-equity ratio and lower earnings potential of US companies was cited as the reason for creation of value-buying opportunities for Indian companies in the US by IMaCS-Virtus Global partners USA.

IMaCS, a wholly owned subsidiary of ICRA Limited, a leading rating and research organisation in India has entered into an alliance with Virtus Global Partners, USA to offer business and management advisory services to North American and Indian companies seeking cross border growth.