ICICI Bank to play bigger role in M&A financing

MUMBAI: ICICI Bank will play a larger role in financing M&A deals for Indian companies looking abroad. This is, in fact, one of the reasons for the massive public issue just completed by the bank, according to Chanda Kochhar, deputy managing director, ICICI Bank.

“With India Inc spending so much on global acquisitions, there is a need for banks like us to increase our balance sheet,” she said, speaking at a CII conference on India Inc going global.

There have been M&A deals worth $47 billion in India in the last financial year, out of which $20 billion was spent on outbound deals, which is five-times what happened in 2005. However, looking at it from a global perspective, India’s contribution to the global M&A-spend of $4 trillion is little over 1%, and there is a lot of scope for growth in these numbers, according to Ms Kochhar.

“ICICI Bank has played a part in more than half of the outbound M&A deals in the last year, but our balance sheet is very small as compared to global levels, which is why we haven’t played a major role in any of them,” said Ms Kochhar.

“But, we have created an investment-banking division with the requisite skill sets to advise our clients and help them structure deals. Further, we have expanded our reach for syndications to 18 countries, and raised considerable share capital,” she added.

India will see overseas-M&A activity of about $30-36 billion this year, according to Adil Zainulbhai, managing director, Mckinsey & Company, India. Out of the expected figure, almost $10 billion of deals have already been completed.

In the backdrop of the increased international activities by Indian firms, the CII has launched a programme to create an ‘ecosystem to accelerate the creation of multinational corporations from India,’ where existing Indian MNCs will interact with and help Indian-MNC aspirants.

The initiative is led by a set of companies, including Infosys, ICICI Bank, Mahindra & Mahindra and McKinsey & Company, and the programme leaders include DS Brar, chairman, CII Indian MNCs committee; and Harvard Business School professor Tarun Khanna, among others.

To start with, it will be divided into three ‘clusters’ — the leadership development & talent management cluster, under Infosys; the India advantage cluster, under Mahindra & Mahindra; and the inorganic growth cluster, headed by ICICI Bank.