1
14:00/15:15- Panel 2
Mergers & Acquisitions between
India and Europe
2
14:00/15:15- Panel 2
Mergers & Acquisitions between
India and Europe
Chairperson: R. SANKARAN, Advisor,
Rothschild India

Sanjay BHANDARKAR, Managing Director,
N M Rothschild & Sons (India)

Kalpesh KIKANI, Senior General Manager,
ICICI Bank

Tim THOMAS, Chief Operating Officer,
Bharti AXA Life Insurance Co.
3
India – Europe Connexion
Sanjay BHANDARKAR
Managing Director
N M Rothschild & Sons (India)
4
India – An Overview

GDP Growth rate amongst the highest
in the world








Clocked at 8.4% last year and estimated
c.9 % for the current year
5th largest nation in the world in PPP
terms (€ 3tn)*
Per Capita GDP (PPP) : € 2,720*
Growth spurt led by manufacturing and
service sectors
Highest FII inflow amongst emerging
Asian economies in CY06 (€ 6.2bn)
FDI Inflows at € 5.5bn in FY 06 (40%
YoY growth)
Among the four fastest developing BRIC
economies in the world
Population of over 1bn with 54% less
than 25 years old
Note * - As of 2006 est
5
India – Developed Capital Market
Capital markets

Has one of the most developed capital
markets among emerging countries



Only BRIC country with Market Cap.
higher than GDP
115 companies with a Market Cap.
greater than €1bn (As of 15th May 2007)
Substantial PE interest
500
400
300
200
100
0
May- Aug- Nov- Feb- May- Aug- Nov- Feb- May97
98
99
01
02
03
04
06
07
BSE Sensex

Indian corporates have made
aggressive cross-border acquisitions
backed by


Funding from investors, hedge funds and
banks
Government pursuing progressive
liberalization and easing of FDI norms

100% FDI allowed in most infrastructure
sectors
Dow Jones
FTSE 250
Source Rothschild analysis
Note Indices rebased to 100
Foreign attractiveness
China
India
USA
UK
Poland
Russia
Brazil
Australia
Germany
Hongkong
Confidence
Source A T Kearney Study 2005
1
2
3
6
Indian Companies Going Abroad

“The Indian Multinational”


Value of outbound deals larger than
inbound



A steel company in UK, an oil & gas
explorer in Norway, a generic drug
manufacturer in Germany; all have
one thing in common - they are all
flying the Indian tricolor
In Jan-March 2007, 40 out-bound
deals with a total value of € 15bn
Led by Tata-Corus, HindalcoNovelis, Aban-Sinvest
Companies looking to expand their
product portfolio, access new
markets, technologies

From regional to global player
7
Indian Acquirers – European Targets

Indian companies on a massive
acquisition spree in past 2 years

12,000
Led by Iron and Steel, Energy and
Pharmaceutical sectors
80
72
10,000
9,707
60
51

More outbound deals than inbound
deals in 2006 in value terms

Largest portion of outbound
acquisitions in Europe (42%) followed
by North America (24%)
€m
8,000
6,000
4,000
40
30
17
18
20
2,000

Tata – Corus deal represents largest
ever acquisition by an Indian
company
2,116
126
197
2003
2004
845
0
2005
Value of Deal (€ m)
Source: Thomson Financial
Note:1) 2007 figures are YTD
2) All completed Deals only
2006
2007
Number of Deals
8
Indian Acquirers – European Targets
Sectoral Split

Iron & Steel


Tata’s € 9.5bn acquisition of Corus Group
PLC
Energy


Aban Offshore’s € 1.1bn acquisition of
Sinvest ASA, an oil & gas E&P company
Pharma &
Biotech
25%
Auto & Auto
Comp
8%
Chemicals &
Materials
9%
Suzlon Energy is currently in the process
of acquiring German based REpower
Systems


Others
7%
Has placed a competitive bid of € 710m
IT & ITeS
8%
Pharma & Biotech


Dr. Reddy’s € 577m acquisition of
German pharma major betapharm GmbH
Ranbaxy Laboratories acquired
Romanian based Terapia SA for € 270m
Energy
33%
Consumer
10%
Source: Merger Market, Rothschild analysis
Note:1) Includes all announced deals from 2004 till 2007 YTD
2) Excludes Tata – Corus deal
9
Indian Acquirers – European Targets
Top 10 Deals (2005 – 2007YTD)
Year
Target
Country
Acquirer
2007
Corus Group PLC
UK
Tata Steel
9,466
2007
Sinvest ASA
Norway
Aban Offshore
1,072
2007
REpower Systems
Germany
Suzlon Energy
710
2006
betapharm GmbH
Germany
Dr.Reddy's
577
2006
Terapia SA
Romania
Ranbaxy Laboratories
270
2005
Thomson SA
France
Videocon
240
2005
Docpharma NV
Belgium
Matrix Laboratories
191
2006
ITERA Group (25%)
Russia
Sun Capital Partners
158
2005
Brunner Mond (64%)
UK
Tata Chemicals
156
2006
Pinewood Laboratories
Ireland
Wockhardt
118
Source: SDC, Merger Market, Rothschild analysis
Deal Value
(€ m)
10
European Acquirers – Indian Targets


18,000
European investment in India
constantly on the rise

Largest ever acquisition by a foreign
company in India
121
15,000
Majority of inbound investments seen
in Telecom, IT and Financial Services
sectors
Vodafone’s recent acquisition of
Hutch’s 67% stake in Hutchison Essar
160
16,578
120
12,000
€m

92
70
9,000
80
53
55
6,000
40
3,000
2,620
1,466
895
379
0
0
2003
2004
2005
Value of Deal (€ m)
Source: Thomson Financial
Note:1) 2007 figures are YTD
2) All completed Deals only
2006
2007
Number of Deals
11
European Acquirers – Indian Targets
Sectoral Split

Telecom



In 2005, Vodafone also picked up 6%
stake in Bharti Airtel for € 686m
Telecom
17%
Transport
3%
Chemicals &
Materials
6%
Mining
24%
Mining


Vodafone’s € 10.5bn announced
acquisition of Hutch’s 67% stake in
Hutchison Essar
UK based Vedanta Resources’ recent
announced acquisition of 71% stake in
Sesa Goa for € 972m
Cement

IT& ITeS
7%
Swiss cement major, Holcim picked up
20% stake in Gujarat Ambuja Cement for
€ 466m
Others
7%
Cement
23%
Consumer
13%
Source: Merger Market, Rothschild analysis
Note:1) Includes all announced deals from 2004 till 2007 YTD
2) Excludes Vodafone – Hutchison Essar deal
12
European Acquirers – Indian Targets
Top 10 Deals (2005 – 2007YTD)
Year
Acquirer
Country
Target
2007
Vodafone Group PLC
UK
Hutchison Essar (67%)
2007
Vedanta Resources PLC UK
Sesa Goa (71%)
972
2005
Vodafone Group PLC
UK
Bharti Airtel (6%)
686
2006
Holcim Ltd
Switzerland Gujarat Ambuja (20%)
2005
Michael Huber Muenchen Germany
2004
Hewlett-Packard Leiden
Netherlands Digital Globalsoft (49%)
245
2005
Holcim Ltd
Germany
Ambuja Cement (67%)
182
2005
SABMiller PLC*
UK
Shaw Wallace
108
2006
Ciments Francais
France
Zuari Cement (50%)
100
2004
DHL Worldwide SA
Belgium
Blue Dart (68%)
Source: SDC, Merger Market, Rothschild analysis
Note *- Through its Indian Subsidiary, Mysore Breweries
Micro Inks Ltd (71%)
Deal Value
(€ m)
10,507
466
246
97
13
In Conclusion
Cross border activity on a continuous rise

Number of cross border deals increased from 60 in 2004 to 266 in 2006


A significant proportion of M&A activity (in terms of volume) was done by mid cap
companies
Number of Indian companies that are able to do major acquisitions abroad
is growing constantly

In the first few months of 2007, Indian M&A crossed € 26bn led by large cap
companies like Tata, Suzlon, Hindalco (Birla group)

Easy availability of debt for acquisition financing

Inbound acquisitions constrained by limited availability of high quality
companies
14
Rothschild India Office



Advised Tata Steel on € 9.3bn
acquisition of Corus Group
Advised Dr Reddy’s € 577m acquisition
of betapharm
Advised Azure on € 113m sale to Subex
Systems

€ 1.4bn Dabhol power project

Daewoo automobile plant in India

Air Deccan, first Indian LCC

Radio Mirchi, first private FM channel


Radha Krishna Foodland, first food
distribution deal
Lanco Amarkantak power project, first
coal based IPP in India
Dr. Reddy s Laboratories
Azure Solutions
Advised on the US$576m
acquisition of Betapharm,
Germany
Advised controlling
shareholders on their US$
140m disposal of
shareholding to Subex
Systems through a GDR
issuance
2007
2006
2006
ICICI, IDBI, SBI
ICICI IDBI EXIM
Air Deccan
Tata Steel
Advised on US$ 11.9bn
acquisition of Corus Group
plc
US$1.9bn disposal of
assets of Dabhol Power
Company to Ratnagiri Gas
& Power Pvt Ltd (a JV
between NTPC and GAIL)
2005
Advised Indian Lenders to
Daewoo Motors (India) on
the monetisation of assets
Raising US$40m private
equity from ICICI Ventures
and Capital International
2005
2005
Entertainment
Network (I) Ltd.
Foodland
Lanco Group
Financial Adviser on fund
raising
US$25m private equity
infusion from Warburg
Pincus
Advised on induction of
financial partners in 600
MW coal based
Amarkantak Power Project
2002
2004
2006
15
14:00/15:15- Panel 2
Mergers & Acquisitions between
India and Europe
16
India-Europe M&A
Kalpesh KIKANI
Senior General Manager
ICICI Bank
17
Agenda
M&A activity in India
Trends in Indian outbound M&A
Considerations in European deals
18
Increased corporate activity

Indian corporates aspiring to become market leaders in their
business segments not only in India but also globally

Growth drivers
 Strong
growth in demand leading to increased utilisation of
existing capacity
 Product
portfolio and service offering enhancement
 Access
to new technology and markets
 Derisking
the business
…aided by easier access to capital supply…
19
Increased access to capital
Private Equity
6,000
4,000
2,000
6,000
7,500
Public Issue (U SD m n)
PE Funding (U SD m n)
8,000
Domestic Public issue
1,750
2,000
0
4,864
4,045
4,000
2,000
0
CY 2004
CY 2005
CY 2006
CY 2004
3,000
2,552
2,500
2,000
1,500
1,000
459
613
500
0
FY 2004
FY 2005
CY 2005
CY 2006
ECB/ FCCB issue
FY 2006
ECB/ FCCB issue (U SD m n)
ADR/ GDR issue
A D R/ GD R issue (U SD m n)
5,386
15,000
13,451
12,000
8,546
9,000
6,000
5,228
3,000
0
FY 2004
FY 2005
…reflecting in the sharp increase in M&A activity in
the recent past…
FY 2006
20
10,000.0
1,028.1
1,087.4
1,628.2
USD billion
1,000.0
2.1%
100.0
1.2%
10.0
0.7%
3.9
0.1
2.7
0.5%
1.0
2002
2003
3.2
0.6
1.5
3.9
1.7
0.5%
•
21.2
7.4
9.4
1.0%
25.9
0.0%
2004
Total Value of Global Deals
•
1.2%
2.0%
28.4
38.4
16.8
10.7
4.4
3.0%
2.7
Inbound
•
4,520.0
3,935.0
1,976.8
2005
Outbound
2006
2007*
Domestic
% Share of india
* 2007 figure is estimated
Source : Bloomberg
Value of Indian deals grew at a CAGR of 140 % from USD 8.3 bn in CY04 to
USD 47.4 bn in CY06
• ICICI Bank was involved in USD 16.5 billion worth of deals in CY06
Outbound M&A deals till March was USD 8.8 billion in 2007
•
Share of India in global market
M&A activity in India
Estimated total outbound M&A projected to be more than USD 35.0 bn in 2007
This appears to be just the beginning of the M&A wave in India
21
India-Europe M&A
Break-up by No of Deals
Break-up by Value
6%
4%
15%
36%
16%
37%
41%
45%
Americas
Europe
Asia-Pacific
Africa/Middle East
Americas
Europe
Asia-Pacific
Africa/Middle East
•
Europe represents the region with the largest number of acquisitions from
India
•
India’s share of outbound deals originating from Western Europe has
increased from 5.0% to 8.5% between CY04 and CY06
•
In value terms it has increased from USD 0.7 billion (CY04) to USD 3.1 billion
(CY06)
22
Agenda
M&A activity in India
Trends in Indian outbound M&A
Considerations in European deals
23
Explosive growth

India's M&A has grown by 150%, next only to France and Hong Kong, each of
which achieved more than 200% growth
 More than 80% of large Indian companies are exploring the M&A option to
grow
 India is second largest investor in the UK, with investments of around USD 2.0
billion (2005 - 2006)
 Notable Deals in Europe
 Aban Offshore acquires Sinvest, Norway for USD 1.3 billion (2007)
 Tata Steel acquires Corus for USD 12.8 billion (2006)
 Ranbaxy acquires Terapia for USD 324.0 million
 Suzlon acquires Hansen, Belgium for USD 565.0 million (2006)
 Dr Reddy's Lab. acquires Betapharm for Euro 480.0 million (2006)
 Reliance acquires Flag Telecom for USD 207.0 million (2003)
 Tata Tea acquires Tetley Tea for USD 430.0 million (2000)
24
Increasing leverage
Target Debt/EBITDA levels in Western Europe
Debt/EBITDA
6,00
5,00
4,00
3,00
2,00
1,00
0,00
2002
2003
2004
2005
2006

Total Debt on target/EBITDA levels increased from 4.93 (2005)
to 5.28 (2006)

Senior Debt/EBITDA levels also increased from 3.92 (2005) to
4.21 (2006)
25
Pricing Trends (W Europe)

Downward trend in Average Margins

Average Margins in 2006 : 238 bps (247 bps in 2005)
Source : LoanConnector
26
Agenda
M&A activity in India
Trends in Indian outbound M&A
Considerations in European deals
27
Key considerations in deal structuring

From a lender’s perspective
 Key challenge is to get direct access to cashflows/assets of target
(based in Europe)
 Regulations differ across countries in Europe
 UK has a whitewash procedure
 Such is not available in other geographies
28
Financial Assistance in Europe
Country
Financial
Assistance
Permitted?
Exceptions?
Belgium
France
Germany
Italy
Netherlands
Spain
No
No
No
No
No
No
Very limited,
none
relevant
None
None for AG
&
subsidiaries
None
relevant
None for NV or
subsidiaries
None
relevant
Merger with
target may
be allowed
BV can give
loans up to
distributable
reserves
Refinancing
may be OK if
entirely
separate
Other
common
forms of
entity (e.g.
GmbH) not
covered
29
Key messages





Indian clients are increasingly looking at acquisitions for growth
The confidence level has increased and these companies are not
shying away from acquisitions of much larger companies
Requirements of Indian clients are not necessarily same as for
corporates in other geographies
 Hence, solutions need to be tailored for Indian requirements
All key decision makers in ICICI Bank are based in Mumbai, thereby
enabling quicker turn around in case of last minute changes in
structure/ quantum of financing
ICICI Bank knows the people who are driving the acquisitions in India
and thus in critical situations has the ability to look beyond numbers
30
Recent Transactions
Acquisition of
Pinewood
Acquisition of 30% stake
in Energy Brands Inc.
Acquisition of
West Asia Drilling N.V.
Acquisition of
Thomson SA’s CPT
plants
USD 33 million
USD 283 million
Structuring & Financing
Structuring & financing
Acquisition of
Sinvest A.S.A
USD 712 million
USD 118 million
Sole advisor and arranger
Structuring and Lead
Arranger
Acquisition of
Carbogen Amcis
Acquisition Hansen
Technologies
Acquisition of
Amann Holdings
USD 75 million
USD 565 million
Euro 35 million
Structuring & Financing
Structuring &
Financing
Lead Arranger
USD 800 million
Structuring & Financing
31
Recent Transactions
Acquisition of spirits
business of
Shaw Wallace
USD 300 million
Advisor
Employee buyout of
Tata Tea plantations
USD 13 million
Acquisition of 20.2%
stake in Great Lakes
Carbon, US
Acquisition of
Keyline Brands
USD 101 million
GBP 18 million
Sole advisor and arranger
Sole Arranger
Acquisition of DCS
Software
Acquisition of Tashkent
Toytepa Textiles
Acquisition of a
South African tyre
manufacturer
GBP 12 million
USD 103 million
Acquisition of
Typhoo Tea
GBP 80 million
Sole advisor and arranger
USD 62 million
Advisor
Sole Arranger
Structuring & Financing
Guarantee facility
32
Thank You
33
14:00/15:15- Panel 2
Mergers & Acquisitions between
India and Europe
34
Indian Market Entry Experience
Tim Thomas
Chief Operating Officer
Bharti AXA Life
Mumbai
Wednesday, May 16, 2007
35
1.0 Market entry - a phased approach
Phase 1
Desk top analysis
Apr-Jul 2004
• Establish the
viability of
commencing a
project to detail
India market
entry
• Confirm scope,
plan, and
deliverables
• Draft critical
success factors
• Agree project
governance
• Desk top data
research
• Initial view of
potential in
market
• First filter of
potential
strategic
partners
Phase 2
Strategy & business case
Aug-Dec 2004
• Strategy
formulation for
market entry into
India and detailed
business case
examining viable
entry options
• Assess critical
success factors
for entry options
• Evaluate potential
partners interest
and suitability and
define preferred
partner list
• Joint Venture and
structuring options
• Evaluation of entry
model options and
optimal business
model
recommendation
• Financial
modelling and
high level
business case
Phase 3
Partner selection
& planning
Jan-May 2005
• Establish a
project team on the
ground in India,
consisting of AXA
secondee, advance
hire, implementation
partners and
external resources
• Finalise partner
selection for
Management Board
endorsement
• Develop regulatory
relations
• Develop high level
target operational
model
• Finalise advance
hires short list
Phase 4
JV execution and operational
design
Sep 05-Mar 06
• Finalise partner
negotiations, JV
structuring and
preparation of
legal agreements
• Detailed
operational design
(partner specific)
• Marketing plan
• Implementation
planning covers:
process, systems,
infrastructure and
back office, branch
roll-out
• Business planning
and financials
• Reporting and
governance
• Appoint key
executives
Phase 5
Implementation
Oct ‘05-Aug 06
Launch
Aug ‘06
• Pre- launch
and the 'startup' phase
preparation
• Regulatory
license
approvals
• Launch comms
• Manpower
recruitment
• Sales force
training,
compensation
and
recruitment
• Launch sales
incentive
programs/KPI
tracking
• Lead
generation
management
• Establish JV
committees
36
Thank you
37
14:00/15:15- Panel 2
Mergers & Acquisitions between
India and Europe