INDIA EXPECTED TO BE THE LARGEST ASIAN INVESTOR IN THE U.K.

Investment by Indian Companies Exceeds That by British Companies for the First Time
India will likely top all other Asian countries at the biggest in investor in the U.K. for the 2005-2006 fiscal year, according to people familiar with such data at the U.K. Trade and Investment arm in New Delhi. As a clear sign of trend-reversal, the amount of money invested in the U.K. by Indian companies had topped the investment made by British companies in India for the last financial year.

India had already overtaken China, and was running neck and neck with Japan, based on the performance of the first three quarters of the fiscal year. The league tables are calculated on the basis of total direct investment and number of jobs created as a result.

More than 430 Indian companies are already based in London. The number of Indian companies that started U.K. operations grew by 23% last year.

It’s not only the U.K. where India Investors are putting their money. In our ‘Special Report,’ Netherlands is featured as another destination for Indian overseas investors.  About $244 million of Indian investments were approved for the Netherlands during the first nine months of the financial year 2005-06, according to Consul General for Netherlands in India.

MULTINATIONALS INCREASE INVESTMENT ALLOCATION TO INDIA; EXCEED ANALYSTS' EXPECTATIONS
In the month of June, several of the world’s most recognizable blue chip firms announced sizeable investments into India.  Leading the pack is the world’s largest computer services company, International Business Machines, Inc., (IBM) which will be pumping $6 billion into the country. This is the largest investment by a multinational operating in India. IBM’s Chief Executive Officer Sam Palmisano, said the money will be used to build service delivery centers in Bangalore and create a telecommunications and research centre for clients.

This investment is three times the $2 billion it has already invested in the country.  IBM has 43,000 employees in 14 cities in India. This is the largest IBM workforce outside the U.S.

 “India and other emerging economies are increasingly [becoming] important part of IBM’s global success,” said Palmisano.

Meanwhile, other notable blue chip companies are following suit:

• The world's second-biggest company by market value General Electric (GE) announced plans to direct $250 million for infrastructure and healthcare projects in India. GE Chairman Jeffrey Immelt is also expecting good business out of the country, setting targets of $8 billion in both revenue and assets by 2010.
  
  
• Microsoft Corp., the world’s largest software maker, and its Chairman Bill Gates are banking on a boom in computer proliferation in Indian rural communities and injecting $1.7 billion investment into the country. The money will be spent on IT literacy, creating local language computing solutions and making it easier for people in rural communities to access new technologies.  Microsoft will set up offices in 33 Indian cities and add 700 retail outlets.
  
  
• EMC Corp., the world's biggest maker of storage computers and software, announced a doubling of its India investments to $500 million by 2010 and a total workforce of 1,600 in next two years. The money will go toward growing the Indian market for information management, expanding the company’s sales and marketing network, and boosting its research and development activities in India.
  
  
• SemIndia and the word’s second largest chip-maker Advanced Micro Devices (Sunnyvale, Calif.) have plans to take on market leader Intel, Inc. with a $3 billion investment in chip manufacturing in India. As mentioned in our earlier issue (Volume 2, Issue 3 | March-April 2006) SemIndia, a consortium of non-resident IT professionals, will finance the investment, which covers manufacturing, business development, and licensing the technology from AMD. Analysts say the deal gives AMD first-mover advantage in terms of building an Indian branded chip.  The Indian chip market is worth approximately $800 million and this will give India a fighting chance of competing with China and Taiwan for a piece of the $220 billion global market.

MORE CROSS-BORDER INVESTING BY INDIAN COMPANIES
The Aditya Birla Group, one of the oldest and largest business houses of India with diversified interests in cement, textiles, commodities and telecom, has acquired Canada's largest BPO company, Minacs, in a deal valued at $125 million.

Minacs, with $265 million in revenue and 6,000 employees, focuses on the automobile, telecom, and financial services sectors across Canada, the United States, and the United Kingdom.

The Toronto-based private investment firm ReichmannHauer Capital Partners signed an agreement with AV Birla Group to invest in the combined entity.  The combined business will have about $300 million in sales, said Group Chairman Kumar Mangalam Birla.

LARGEST IPO EVER SIGNALS STRENGTH OF INDIAN REAL ESTATE MARKET
Investors looking to take part in India’s booming real estate market may have an opportunity when the country’s largest real estate company, DLF Universal Ltd, lists its shares on the Bombay Stock Exchange and National Stock Exchange in July. With possibly an issue size of about $3 billion, this might be the largest Indian Initial Public Offering.

The company is likely to bring the issue any time in the quarter ending September 2006. The strength of the company lies in its land-base, which was valued at close to $19 billion (Rs. 853 billion). With this IPO, DLF might become the top Asian real estate firm by market value, ahead of Japan’s Mitsubishi Estate Co. Ltd. that has a market value of about $25 billion. DLF had announced a net profit of $44.3 million (Rs. 199.4 crore) for the fiscal year 2005-06, showing a growth of 138%.

This ongoing demand for the commercial real estate segment refuses to fade out, largely due to retail push by a number of players and the increasing demand from business process outsourcing (BPO) segment. In fact, the service sector accounts for more than 70% of the demand for new properties.

Residential properties, however, still remain affordable compared to the earlier peak of 1995 on the basis of paying capacity versus prices. This is because of the rising incomes, low interest rates (compared to 1995) and tax incentives. According to a recent Deutsche Bank Research report, the affordability index of house prices in Mumbai are only a fifth of what it was in 1995.