Dispatch from India - 2011
July 13, 2011
Dear Friends,
It is the start of Monsoon season in Mumbai, and torrential rains recently snarled traffic in the city. But that hasn't slowed down the frenetic pace of life here. I recently spent a week visiting healthcare companies in Mumbai and Delhi with our Indian affiliate, Singhi Advisors.
As the United States and Europe continue to face slow growth prospects and a disappointingly weak recovery outlook, India is poised to register strong economic growth in 2011, offsetting some of the impact in developed economies. During the first week of June, Secretary General of the Organization for Economic Cooperation and Development (OECD) Angel Gurria said that "the Indian economy is enjoying one of the highest growth rates in the world, more than triple the rate of the OECD member countries." He noted that "India's estimated GDP for 2011 will place it tenth in the world, ahead of 27 OECD members. Also, the prospects for continued high rates of growth in the Indian economy appear strong."
Indian newspapers report that the local private equity community is racing to put capital to work in middle market companies, and there is enough uncommitted private equity capital available to fund all deal activity at 2010 levels for the next two years. This capital overhang is bidding up transaction pricing, particularly for growth equity.
The BSE Healthcare index, which rose 10% in 2010, has outperformed the broader market (Sensex), which has fallen slightly year-to-date. Within the space, and despite the outperformance, most analysts are bullish on mid-cap names, as they are likely to continue to deliver robust growth in net profits over the next three years.
Brocair's Indian affiliate, Singhi Advisors, which covers their domestic market from four offices in India, as well as overseas from locations in Mauritius and Melbourne, has been closely following markets that include active pharmaceutical ingredients, generic pharmaceutical formulations, and disposable medical products, as well as the laboratory tools and services spaces.
Singhi, which also covers other sectors, is active on a range of assignments outside of healthcare including projects in auto components, power transmission and distribution, renewable energy, metals and mining, coal, financial services, information technology/enterprise solutions, home furnishings, and agrochemicals.
In the attached PDF are some metrics on the Indian healthcare market, and recent transactions in the space. If there is anything we at Brocair can do to assist you with your mergers and acquisitions efforts in India, please do not hesitate to call us.
Gregg Blake, Managing Partner
Brocair managing partner Gregg Blake, right, with Singhi managing partner, Mahesh Singhi, during recent meetings in Mumbai.
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