BCMS Research Insights: Major investment into UK SMEs predicted to come from India
Cross-border transactions are increasingly common in M&A, approximately 30% of BCMS transactions involve an overseas acquirer. As the Indian Prime Minister, Narendra Modi, visits the UK, BCMS is predicting a significant increase in acquisition interest from India.
Investment from India
In 2014 alone, investment from India into the UK increased by 64%. India is now the UK’s third largest investor after France and the US.
In an interview with the BBC, Alpesh Patel, of London-based private equity business Praefinium Partners, says that while the success of companies such as Tata and Infosys is well known, the quality of Indian small to medium-sized enterprises has improved significantly over the past 10 years, and many are looking to enter EU markets using the UK as their gateway.
He adds that the ease of doing business in the UK, as well as the English language and familiarity with UK institutions, also makes the UK an attractive proposition for Indian investors.
“Ease of business here is often overlooked and taken for granted,” says Mr Patel.
One area that particularly appeals to Indian investors is the ease with which they can raise finance in the UK.
“They're often not looking for money from the UK to go into their company in India, but looking for UK money going into their UK operations. We really overlook the size and strength of our angel investor and venture capital community.
“Relative to companies in India, we're seen as an absolute haven in terms of access to capital if you've got a good business.”
BCMS has recently seen a 30%+ increase in the number of Indian companies making their way onto our Research Lists. Although China continues to be a very important country for investment into the UK, culturally there is usually a better fit with India. While the Brazilian, Chinese and Russian economies are all showing signs of slowing, India is booming.
“Indian investment is currently focussed on larger deals, but we predict this trend will begin to impact the SME market in the near future. In 2016/2017 and beyond we would expect growth and interest in deals at SME level, based on the growth rate of SMEs in India,” says Chris Fox, UK SME Research Manager.
The BCMS Research team continues to work hard to reflect this exciting new M&A market in our Research.