Indian billionaires buy foreign companies as growth slows at home

The broader economic backdrop has also changed sharply since the early 2000s. During the previous acquisition boom, India was in the midst of a roaring bull market. Today, the country is grappling with a rapid exodus of foreign portfolio investors, a sharp slowdown in net foreign direct investment (FDI) and stubbornly weak private sector investment despite tax cuts and production-linked subsidies offered by the government."Corporate profits [of India's top 500 companies post-Covid] grew at 30.8% per annum. But still, our overall capital formation rates from the private sector have been disappointing," India's chief economic advisor V Anantha Nageswaran recently said at a policy conference.Experts say the rush to expand overseas - despite repeated exhortations from the government to invest more within India - reflects both growing disaffection with the domestic business environment and better diversification and capability-building opportunities abroad. "There is plenty of Indian money heading abroad. Even among the companies that we own in our portfolio, many are setting up greenfield factories in the US and other places where industrial land is almost free and accessing working capital is much easier than here," Saurabh Mukherjea of Marcellus Investment Managers told the BBC.And it's not just the big companies driving the trend.While the Sun Pharma deal, or tycoon Mukesh Ambani's reported backing of a $300bn oil refinery project in Brownsville - announced by Donald Trump, though not publicly confirmed by the Ambanis - may be among the most high-profile examples, Mukherjea said "dozens of smaller Indian companies are making similar greenfield investments or pursuing smaller acquisitions".This trend is supported by stronger balance sheets and improved access to global financing, according to Neha Singh, co-founder of the data intelligence company Tracxn."Indian companies are increasingly looking overseas to access markets, brands, technology capabilities, R&D expertise, and established distribution networks that may otherwise take years to build organically," Singh said.These acquisitions have also picked up pace as companies look to protect their supply chains in a world where chokepoints and trade tariffs are being rampantly weaponised, say experts.Dhiraj Singh/Bloomberg via Getty ImagesForeign investors have pulled out billions of dollars from Indian markets this year Overseas acquisitions, however, can be hit or miss. Tata Steel's purchase of Corus Steel, for instance, turned out be an "albatross" around the company's neck for decades, says Mukherjea. What is also striking, he adds, is that even after all these years, Indian companies are still unable to pay for these deals with shares. Even a deal as large as the Sun Pharma one was all-cash, which can be financially risky.Still, this will not be the last of such acquisitions.A spree of free trade deals between India and the UK, Europe, Australia and other countries could hasten the trend and lead to a "deluge of outbound deals from India as companies head off to invest in the West to build up bases in the years to come", Mukherjea says.Moreover, many next-generation corporate scions are choosing to live and study abroad, so it is logical that they would want to hold their assets in foreign currency, "especially because the rupee loses 40% of its value to the dollar every decade", he adds.