Amazing rise of Asian enterprise
09 November
By John Duckers Business Editor

The phenomenal success of Britain's Asian business community is now being rivalled by the relatives back home.

It is a remarkable double hit.

As the UK sees more and more Asian millionaires and billionaires, it seems barely a day goes by without yet another story about burgeoning Indian business.

Once something of a business backwater in world terms, India is now firmly on the international stage.

Not that there wasn't huge amounts of business acumen and a long tradition of trade before.

However, the recent breakthrough has been hugely impressive.

It is of course that inate feel for business that has spawned so many successful Asian enterprises in the UK.

If you look at the various Asian Rich Lists, you get a feel for how big a sector it now is.

The combined wealth of the top 300 Asian multimillionaires is estimated to have risen from £24.9 billion in 2005, to a staggering total of £35.5 billion this year - an increase of 42.6 per cent.

It is lead by London-based steel tycoon Lakshmi Mittal, with a fortune of £14.8 billion - making him, it is claimed, the third wealthiest person in the world.

And he, of course, has hardly been out of the news in the past few months as he progressed Mittal Steel's £17 billion takeover of rival Arcelor.

Perhaps the best known Asian tycoon in the Midlands is Lord Paul of Marylebone, one-time chancellor of Wolverhampton University, who founded Caparo Group.

The company, started from a small factory in Huntingdon, Cambridgeshire, in 1968 now has a turnover of more than £600 million a year and employs 4,200 people worldwide.

In this year's Midlands Rich List published by The Birmingham Post, Lord Paul's wealth is listed as £130 million, and there are a host of others - Abdul Majid Alimohamed, £115 million, Resham Singh Lally, £78 million, and Ranjit and Baljinder Boparan, £70 million.

Just three per cent of people on Asian Rich Lists inherited their wealth, compared to a third of entrants on the The Sunday Times Rich List.

However, only 22 women are among the top 300 Asian entrepreneurs, including Meena Patak, of the Patak spices empire.

Their success is matched by the Indian subcontinent.

No longer - were it ever true - is Indian business all Bollywood films and call centres.

Indian investments in the UK are reckoned to have risen 110 per cent in 2005-6.

It is said that no fewer than 76 Indian companies have located or expanded in the UK, creating some 1,500 jobs, and more than 20 Indian companies are quoted on the London markets.

Tata Steel's daring £4 billionplus move to buy Anglo-Dutch steelmaker Corus, a company with four times its sales, highlights growing ambition as cash-rich Indian firms begin to look beyond their home turf.

India's automotive, engineering, pharmaceuticals and software services sectors have come alive amid the mergers and acquisitions frenzy of global markets.

Deal sizes are increasing and confidence in making big acquisitions has risen across all sectors of the Indian corporate world.

The Corus deal is India's largest foreign takeover and means the total value of Indian acquisitions abroad this year has outpaced purchases of Indian firms by overseas companies.

The driver of Indian firms' new acquisitiveness is a combination of technology and access to wider markets, according to James Winterbotham, a co-founder of consultancy firm India Advisory Partners.

'There is still a lot of technology which is sitting within international companies. Historically, you would joint-venture into India, now Indian companies are of the scale where they can go and buy that technology,' says Mr Winterbotham.

The Corus deal highlights India's gradual shift from a capital importer. Asia's fourth largest economy, India launched market reforms more than a decade ago to woo foreign investment.

India has a booming economy which has grown at an average of eight per cent in the past three years - and stock markets are at record highs, up nearly 40 per cent this year.

There is a rapidly expanding middle class which is keen to buy consumer goods and services.

Indian investment has been pouring into the UK, but it is claimed too much of the traffic is one-way.

It is alleged that British firms are unable to capitalise on affinities in language, law and culture because of restrictions on foreign investment in a number of sectors, including banking, telecoms and retail.

This has made it difficult for groups like Tesco and Standard Chartered to develop there.

Including the Tata deal, Indian companies have announced overseas acquisitions worth £10.4 billion so far this year, up from £2.37 billion in 2005, data from research firm Dealogic shows.

In contrast, acquisitions in India by overseas firms add up to £4.8 billion so far this year.

The average size of overseas deals by Indian companies has increased to about £26.4 million from about £5.27 million three years ago.

India ranks fifth among the countries making the most acquisitions of British companies by deal value so far this year after Spain, the United States, Germany and Australia.

Some of the biggest overseas takeovers by Indian firms this year include Tata Tea's planned purchase of 30 per cent of Energy Brands for £356.8 million, Dr Reddy's Laboratories' acquisition of German generic drug maker Betapharm for £301.4 million, and wind-turbine maker Suzlon Energy's £274 million buy of Belgium's Hansen Transmissions.

Firms in India's showpiece software services sector - that includes US listed Infosys Technologies and Wipro - have made some smaller niche acquisitions.

But in some ways it is still only a start. 'India will be a relatively small player on the international M&A market place for some time,' says Mr Winterbotham.

'There are probably at the moment still only a relatively small number of companies of the size and management depth to actually make those acquisitions and have that international culture.' But be it India or the UK, the deals are happening, and just think of this - by 2008 India will have 60 million technology graduates - which corresponds to the entire population of Britain.

Amazing.