Indian companies are negotiating several M&A deals in Canada to secure technology, natural resources and access to the US market as they globalise operations, while Canadian firms are seeking capital, marketing skills and partners in the rapidly growing Indian economy.
The number of deals, including the ones being negotiated, could be in hundreds, ranging from consumer products to technology companies, Rahim Allani , managing director at Orbixa Capital International , told ET on the sidelines of a conference. "A lot of companies are looking for deals. Canada is a very good place for entry to the North American market," said Allani, whose company also has mandates from Indian companies for a few deals in China.
Indian companies have emerged as leading predators in the international arena after a spate of outbound M&A deals, including Bharti Group's $10.7-billion deal for the African telecom assets of the Kuwaiti Group and the earlier high-profile deals like Hindalco's acquisition of Canadian aluminium maker Novelis and the Tata group's acquisition of Corus as well as Jaguar and Landrover. Indian deals added up to nearly $70 billion in 2007, but had fallen to $21 billion in 2009 before recovering to the level close to the 2007 record.
Apart from big-ticket acquisitions, there were also a series of smaller deals, many of which did not add significant value to the company that made the acquisition. But the deals currently being negotiated are very focused, Allani said. "Earlier, Indian companies looked at a deal for the sake of a deal. Now they are looking for a specific market, technology, good fit and good value or a brand," he said.
Industry officials said many medium-sized or small Canadian companies, particularly those involved in clean technologies, were potential targets as they had the expertise and knowhow but lacked funding, marketing skills and entrepreneurial abilities of Indian firms. "The venture capital environment in Canada is not robust enough. It is very difficult to get funding," said Sarah Kutulakos, executive director of the Canada China Business Council.
Josee Methot, Montreal-based CEO of Reseau Environment, which represents 400 companies, 200 municipalities and 20 government agencies involved in environment and related technologies, said Canadian companies lacked the necessary aggression to compete and expand on their own.
"We have great doers but we don't have good sellers. Big companies are buying our technology. We try to tell companies that we can do it, the government can help. But we are not aggressive enough. That is the way we are conditioned. That is the way we are in school," she said on the sidelines of the Americana 2011 conference organised by Reseau Environment, which brought together hundreds of delegates from USA, Europe, Canada and a few from Asia.
In contrast, senior Indian executives exude business confidence.
"Indian companies have the balance sheet and the muscle to take technology to market," RR Sonde, executive vice-president of Thermax said on the sidelines of the Americana conference.