The Russians (and Indians and Koreans) Are Coming

Acquirers from emerging markets are taking much bigger bites in developed nations — especially the U.S. and UK.
Stephen TaubAugust 19, 2008

Acquirers from emerging markets are playing a much larger role these days in acquisitions markets among developed economies. In fact, there were 90 such “emerging-to-developed” deals in the first half of this year, compared to 161 developed-to-emerging deals, according to a new study.

The 56-percent relationship of so-called E2D deals to their “D2E” comparative group was an increase from 47 percent a year ago, and 38 percent two years ago, according to KPMG International’s latest Emerging Markets International Acquisition Tracker study. The U.S., the UK, and Germany have become the top developed economies in which emerging market companies make acquisitions, the report said.

In the first half of 2008, emerging-market companies made 30 acquisitions in the U.S. and 18 in the UK. During the period, the most active emerging market-based companies making global acquisitions in developed economies were from India (51 deals), Russia (11), and South Korea (8), with India being particularly acquisitive in the U.S. (17 deals) and UK (14).

In fact, the 51 “outbound” deals that Indian companies did sharply outpaced the 17 inbound deals in the first half. With outbound deals outnumbering inbound deals for the last three consecutive six-month periods, India seems on its way to becoming a net “deal exporter” early next year, KPMG noted.

Since the study’s inception in 2003, the 322 acquisitions made by India-based companies in developed economies is now approaching the 340 completed acquisitions that companies from developed countries have made in India.

“A robust Indian economy and the global ambitions of successful Indian corporations spurred an increase in Indian outbound investment over the past several years,” said Arun Kumar, partner in charge of KPMG’s U.S.-India practice. “Indian companies are particularly interested in the United States due to its business climate and its large market. In addition, Indian companies see the United States as a source of innovation and expertise.”

Looking the other way, in the past six months the developed countries making the most corporate acquisitions in emerging market economies included the U.S., with 59; the UK, with 35; and Germany, with 16. The leading emerging market acquisition targets for companies from developed economies were China (42), Brazil (35), and Russia (32).