India's Kotak Investment Banking yesterday announced an exclusive co-operation agreement with independent Japanese investment bank GCA Savvian Corporation. The agreement is intended to cover advice to both Indian and Japanese companies on cross-border mergers and acquisitions.
The two firms worked together in 2008 to organise an "India-Japan M&A Seminar" in Tokyo and Osaka in which 300 Japanese companies participated. Since then the duo has been engaging in dialogue with Japanese companies which are interested in developing a strategy for India.
"Japanese companies are looking for strategic M&A opportunities in high-growth markets and India has emerged as one of the preferred investment destinations," says Akihiro Watanabe, managing partner and founder at GCA Savvian.
During 2008, Japanese companies embarked on a series of acquisitions across sectors including pharmaceuticals, food and financial services. Japanese companies are driven by both depressed valuations globally and war chests of money accumulated over time due to conservative dividend and leverage policies, and expanding in markets such as India represents an opportunity to secure future growth and reduce their dependence on Japan's ageing population.
One of the largest India inbound M&A deals during 2008 was the takeover of generics firm Ranbaxy Laboratories by Japanese pharmaceuticals firm Daiichi Sankyo. Daiichi agreed to a valuation of $8.5 billion to acquire a controlling interest in India's largest drug company. Daiichi was advised by Nomura, while Ranbaxy took in-house advice from its group finance company, Religare Capital Markets.
The deal followed a spate of pharmaceutical acquisitions by Japanese firms, mostly in the US. At the time, a number of investment bankers commented that the Daiichi deal could spawn a rash of copycats and started trying to develop potential deal opportunities.
GCA was established in Japan in 2004 and in 2008 joined forces with US-headquartered Savvian Advisors. In addition to an office in Tokyo, GCA Savvian now has offices in New York, San Francisco, Chicago and Menlo Park in California.
Kotak used to have an investment banking joint venture with Goldman Sachs which ended in 2006 with the Indian partner buying out the US investment bank's stake. Kotak was founded in 1985 by Uday Kotak, one of India's most high-profile entrepreneurs and dealmakers.