Into Rainbow Country ; Over the Past 3-4 Years, a Number of Domestic Firms Have Bid for South African Companies. Why Is India Inc. Headed to South Africa?

Business Today (June 01, 2008)

Author: T.V. Mahalingam

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Summary

Bharti Enterprises' multibillion dollar play for telecom major MTN may be the first bid for an asset of such magnitude in South Africa by an Indian company, but it isn't as if that region hasn't interested Indian promoters before. Over the past 3-4 years, a number of domestic firms, including pharmaceutical majors like Ranbaxy, JB Chemicals & Pharmaceuticals and Glenmark Pharmaceuticals, along with the Tatas, the Godrejs and Vijay Mallya's UB Group, have bid for South African companies. The latest 'India into Africa' transaction was concluded in April when Godrej Consumer Products picked up hair products company KINKY for Rs 140 crore. In 2006, the company had acquired its first company in the country, Rapidol, thereby entering the hair colour business. According to data compiled by Thomson Financial, since 2006, Indian companies have pulled off some 12 buyouts worth a little over $200 million (Rs 800 crore), till date. All these, of course, pale in comparison to the big-bang acquisition made by China's ICBC, of South Africa's Standard Bank Group for $5.6 billion (Rs 22,400 crore) last October.

Of course, if Bharti does succeed in bagging MTN, that will change the M & A sweepstakes once again. There are several reasons for companies queuing up to enter the South African market. For one, South Africa is considered the gateway to the rest of Africa. As Hoshedar Press, Executive Director & President, Godrej Consumer Products, explains: We were looking at markets where there is a large population of people with black hair. South Africa fitted that bill.