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indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

IN S
T
S
!
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R R
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T MA b
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V NG on
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Paresh Sheth
i
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I R
c
JO ME
A
On
E
d

Joint Ventures
paresheth@yahoo.co.in /
+919820608727

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

THE NEXT 20 MINUTESOR SO

Mergers,
Acquisitions,
Alliances,
Joint ventures,
Collaborations,
Start ups,
Buy Outs.

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

COMMON DENOMINATOR
Times Bank ;

HDFC Bank

IndiaInfo / Seranova ;

Just Dial

Topworth marketing P Ltd ;


Age Marketing ;

Sell off to HNI investors

Sell Off to Competition above

ICICI Bank ;

ICICI Ltd / ICICI PFS / ICICI Capital

ICICI Bank ;

Bank of Madura

IDBI Bank ;

United Western Bank

IDBI Bank ;

IDBI Limited

IDBI Bank ;

IDBI Fortis Federal bank Life Insurance

Principal Financial Group ; PNB, Vijaya Bank 8000


Branch Alliance
FirstRand Bank ;

India Start Up

HBS Swiss Bank ;


Managing Indian Sub in to
Investment Banking
indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

CAVEAT
My thoughts are
Mostly based on personal experiences
Hence Biased

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

TAKE AWAY
Understanding why JVs are important
POA for Students & Practitioners
Spotting JV opportunities

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

Why are alliances / Joint ventures


Imperative?

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

ALL BUSINESSES ARE


1. Marketing; and 2. Innovation
Both Require
Resources, Ideas and Markets.
Emerging
Markets
Population

s
Eco Growth
ge
n
Environmental
change;
dynamic
environments;
less predictable
e
ll
a
Environment complexity; large number of external factors
Ch
Resource scarcity;

Scarce

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

SOLUTION TO SCARCITY

Solution is Sharing, Leveraging, Outsourcing and


Borrowing
Strategic Alliances
Joint Ventures
Mergers & Acquisitions
Solo??
indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

SO
If Mergers, Acquisitions,
Alliances and Joint Ventures
are IMPERATIVE...
What are we looking at?
Are we in a sweet spot?
Is there an emergence of
unstoppable trends?
What's the challenge?
How do MNCs think and Plan?

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

UNSTOPPABLE TRENDS
Strategy formulation & implementation is being impacted by 3
unstoppable trends

Globalization, Technological advances,


and Partnering
that feed and reinforce each other.
Globalization means blurring, increasingly permeable national
boundaries.
Technological advances means industry convergence or blurring
industry boundaries.
Partnering (strategic alliances, international joint ventures, global
networks) means blurring firm boundaries. National, industry, and
firm boundaries are all becoming porous, and the unprecedented
challenges and opportunities created by such porosity provide the
broad context and the underlying importance of interorganizational
networks to global strategy.

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

OPINION
A recent report by World Bank Vice President Otaviano
Canuto argues that developing countries will be
engines of growth and could carry the world economy
in the future, provided they have a clear strategy.
If so, there may be enormous opportunities for
companies to claim market leadership by helping
developing countries to establish these growth
strategies. A different role for business in
development will certainly emerge.
But what will be its parameters, objectives and
responsibilities?
What will be the key requirements for a new era and how
can we create sustainable strategies?
indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

TWO CHALLENGES EMERGE


Two challenges to business :
1. The definition of strategies and partnerships
that enhance sustainability of business and
market development;
2. The need to innovate to deliver profitable
products and services in developing countries. ;
LOW NEED TO INNOVATE

SOURCE DELOITTE MANUFACTURING

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

So what does a Typical MNC


do?
(to address the challenges)

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

HOW DO MNCS TARGET A COUNTRY?

Personal Experiences of Senior Managers

Gut Feel or Anecdotal Advice / Evidence

Country Portfolio Analysis & Risk Assessment

GDP & Per Capita Income

Population Composition

Growth Rates

Purchase Power Parity & Exchange rates

World Economic Forums Global Competitiveness Index

World Banks Governance Indicators

Transparency Internationals Corruption ratings

Weight in Emerging Market Funds Investments

Political Forecast

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

COMPOSITE INDEX
Brazi Russi
l
a

Indi
a

Chin
a

Growth
Competitiveness
(world eco forum
report)

57

70

55

46

Business
Competitiveness
(world eco forum)

38

61

30

47

Voice &
Accountability
(world bank report)

58

33

60

10

Composite Risk
(100 is least risky)**

70

78

72

76

Weight in Emerging
6.9% indus1advantage
5.2%
5.0
4.7
Market Index***SCB
%
%
M E R G E R S , A CQ U I S I T I O N S , A L L I A N CE S , J O I N T V E N T U R E S

WHAT'S WRONG WITH COMPOSITE


INDEX?
COMPOSITE INDICES are useful; but only when they are used a basis of
drawing up strategies when home base and target countries have
comparable Institutional contexts
For example US and UK have similar Product, Capital and Labor
Markets. They also have comparable network of skilled
intermediaries and strong regulatory systems
Softer Infrastructure Issues are missing !!
-

South Africa BEE

Malaysia ; Government Pro Malay policy

Its difficult to imagine a business in china without government


support

Financial Reporting in China

Corporate Governance issues in China and Russia Threat to


Intellectual Property Rights (IPR)

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

EYES OF AN MNC
If a MNC uses such a composite
index to define the country
How do they finalize the entry
strategy?

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

HOW DO MNCS DECIDE IF M&A OR JV


OR ALLIANCE? OR GO SOLO?
Goals
Strategy
Strength
s
Resource
s

Defin
e
Gap

Develop
Strengths?
Contract
Time?
manufacturing?
Money?
Contract Sales?
Energy?
Alliance? Licensing?
Joint Venture?

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

QUESTIONS

How close are your strength and internal


resources to those identified in the GAP?
Resistance to internal development; towards
fulfilment of the GAP?
Difference in organizational model required to
achieve strategy?
Resources; availability? Inherent strengths?
Organizational ability for scalability?
Time, Money and Energy cost; estimated to
resolve organizational conflict if any towards
achieving strategy?

Cost of outsourcing? Cost of Alliance?


How deep an understanding is required?
How integrated the strength / process / geography / activity; to future strategy?
How important the customer / profitability / branding?
How strategic an alliance is required?
The need to possess certain abilities / competencies before you can profitability acquire certain
other competencies / abilities / technologies
In any alliance; the more the departments and people have to coordinate; the lesser the chances
of success.
How far does this alliance / JV take us? In our goals

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

TWO MORE QUESTIONS


1.How tight an Embrace?
2.Alliance Management Capacity?

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

ANSWERS
Answers to questions posed in the last pagewill
give us a Solution !
Alliance / Outsource / Joint Venture / Acquisition /
Solo

Other Factors
Product / Price / Promotion / Place / Public / Politics
This will give us the final answer; to the kind of
alliance we should strike; if at all.

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

WHAT'S WRONG HERE?


Even the Best of GAP ANALYSIS & COMPOSITE
INDEX STUDY leaves out Institutional voids!
In emerging economies; soft infrastructure
which plays a critical role in execution of
business models is missing ; These are
Institutional Voids !

These institutional Voids are not shown in any gap analysis


or any Composite Index.

Institutional Voids hamper the implementation of


Globalization Process.

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

INSTITUTIONAL VOIDS
- Skilled Market Research
Firms to understand
Customer Preferences
- End to End Logistics
Provider (Chinese Example)
- Manpower & Search Firms
- Lack of Specialized
Intermediaries
- Efficient Bankruptcy Processes
- Financial reporting / GAAP etc
- Capital Markets & VC
funding
- Debt Capital Markets
- Stock Exchanges / SME
Exchanges
M E R G E R S ,

A CQ U I S I T I O N S ,

- IPR & Copyrights


- In country Brand perception /
Preference
- Supplier Base & Logistics
- Modes of Entry / Ownership
- Civil Society & NGOs
- Politics & Corruption
- Trade Unions
- Management talent
education/english
- Permissible modes of entry
- Data base vendors
- Accounting Firms
- Product Rating Companies like JD
Power
- Reserved Products for SME /
Indigenous
- Contract Enforcing
Mechanism
indus1advantage
A L L I A N CE S ,

J O I N T

V E N T U R E S

SO
If you look at issues with
Composite index and Institutional Voids
The obvious answer ;
Entering emerging markets without local
support is a folly..
Alliances / JVs are in;
Solo is definitely not worth the costs.

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

HAVING SAID THAT


Research suggests that multiple JVs fail. Even
merged companies are demerged.
Frankly; this is an entry strategy; which may
last 5 to 15 years. Once the MNC company is
set in India and has a foot hold. to remain
together is another question!
Lets leave this for another dayRight now lets
see if there is an action plan we can form to
enable JVs / Alliances / M & As and act as a
catalyst for MNC entry.
indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

II

A
T
N
R
IO
A
P CT

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

SPOTTING OPPORTUNITIES
Goals
Strategy
Strength
s
Resource
s

Defin
e
Gap

Develop
Strengths?
Contract
Time?
manufacturing?
Money?
Contract Sales?
Energy?
Alliance? Licensing?
Joint Venture?

**Value Chain Analysis and Multiple Other ways of defining GAPs.


Indus1Advantage has a proprietary model to Identify GAPs.

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

HAVE A LOOK AT INSTITUTIONAL VOIDS


AGAIN

- Skilled Market Research


Firms to understand
Customer Preferences

- End to End Logistics


Provider (Chinese Example)
- Manpower & Search Firms
- Lack of Specialized
Intermediaries
- Efficient Bankruptcy Processes
- Financial reporting / GAAP etc
- Capital Markets & VC
funding
- Debt Capital Markets
- Stock Exchanges / SME
Exchanges
M E R G E R S ,

A CQ U I S I T I O N S ,

- IPR & Copyrights


- In country Brand perception /
Preference
- Supplier Base & Logistics
- Modes of Entry / Ownership
- Civil Society & NGOs
- Politics & Corruption
- Trade Unions
- Management talent
education/english
- Permissible modes of entry
- Data base vendors
- Accounting Firms
- Product Rating Companies like JD
Power
- Reserved Products for SME /
Indigenous
- Online Platforms
- Contractindus1advantage
Enforcing
Mechanism
A L L I A N CE S , J O I N T V E N T U R E S

HOW TO MAKE THE MOST OF IT?


Institutional Voids or Value chain gaps
Opportunities for Investment Bankers and Intermediaries
Sure MNCs have Expertise, Credibility & Experience
Localities Advantage? Intermediaries are
- People intensive; local culture & Language required
- Information Sensitive requires local expertise to access scattered
Info and data
- Government Support; Few businesses prohibit Solo FDI / Entry

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

EXAMPLEOF FILLING INSTITUTIONAL


VOIDS!

China Emerge Logistics


8 lane highways
but transportation system underdeveloped
Multiple Tolls

Emerge Logistics; takes foreign companies all the way through the
delivery process.
Filling import papers to customer collectibles.

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

TOSHIBA
Toshiba; Strategic Alliances as a Key Element of Strategy
To develop strategic alliances with different partners for different
technologies
Because a single company can not dominate any technology or business
by itself

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

SPOTTING JV OPPORTUNITIES
1. Identify Gaps this is the opportunity.
2. Spot Institutional Voids - this is where u make a compelling
case for the Foreign corporate to come to India (if u solve
them that is)
3. Identify the right Indian partner who can nullify this void and
you have the right recipe for a great Joint Venture.

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

ed
s
es
r
p
x
E

A
TH
ew
i
V

K
N

U re
YOere a

r
e
p

l
a
n
so

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

NOTES
Emerging markets = Argentina, Brazil, China, Czech Republic,
India, Indonesia, Mexico, Poland, Russia, and South Korea

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

Paresh Sheth
Paresh runs an investment bank indus1advantage and specializes in cross border joint ventures and alliances.
His clients include large industrial houses, multinational corporates and listed corporates. He works across
multiple sectors including education, Info tech, energy, clean technology & green energy, banking, financial
services, insurance, wealth management, construction, engineering, health care, water technology &
infrastructure.
Paresh also works as the dean at a leading management institute dedicated to Investment banking & Strategy.
He is also an advisor to multiple companies including UB Engineering Ltd and P Mac Private Limited.
Prior to this he was India CEO and Full time director for a Swiss bank Indian subsidiary and the Deputy CEO for
another Swiss bank subsidiary in to Brokerage and wealth management.
Paresh has the bandwidth to handle multi-billion dollar conglomerates, various family offices and SME/ MME
clients as well; at the same time. He assist large companies involved in mergers, acquisitions, joint ventures,
alliances, technology transfer and distribution tie ups He advises SME / MME on sales, innovation, alliances,
growth and board formation. He also works with various single / multiple family offices and advises them on
setting up new businesses. Paresh currently also works with leading wealth management and brokerage
companies and capital market investors to design their strategies, enhance profitability and establish
competitive sales and risk organisations.
Paresh has played a pivotal role in setting up a MNC bank, an MNC Insurance company and a financial product
distribution company amongst others as a project manager. An entrepreneur at heart; he set up his first
company at the age of 21. He has subsequently worked for 20 years at various BFSI corporates including IDBI
Bank, HDFC Sec, FirstRand Bank, Hinduja Bank Switzerland and ICICI bank in various capacities including CEO,
board member and business head. He was the chairman for finance and membership for 3 years at CII YI
Mumbai. He is one of the few professionals to have managed a team of 7500 executives and 5 million
customers. He was frequently involved in strategic initiatives to align the retail and wealth banking activities
with the changing times and the introduction of innovative products and services to a new customer base and
different markets. He was also a part of business process reengineering at IDBI Bank and represented the retail
banking unit in the BPR forum. Paresh championed the customer value management unit at IDBI Bank.
Paresh has studied at IIM Calcutta and Mumbai University. He was a faculty for strategy at a leading
management institute in Mumbai for 3 years and now is a regular lecturer at leading management schools
including IIMs. He is a regular speaker at events on Entrepreneurship, Banking, Investment Banking and
Strategic Management. He is currently authoring a book on wealth management.

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S

Indus1Advantage is in the business of investment banking. While we are sector


agnostic; the origination strategy revolves around cross border deals. We assist
companies involved in mergers, acquisitions, joint ventures, alliances, technology
transfer and distribution tie ups. And provide ancillary and advisory services. We also
assist in raising capital.
As a boutique investment bank we specialise in scouting for, understanding and
bringing global companies to India to setup base or form joint ventures / alliances with
suitable Indian corporates.
Family offices form a considerable part of our customer base. We help them invest in
and build up new businesses. We also assist them in formation of trusts and companies
overseas.
We also offer advisory services including sales, accounting, marketing, listing guidelines
and board formation to SMEs / MMEs
Sectors where we have expertise and experience are education, Info tech, energy,
clean technology & green energy, banking, financial services, insurance, wealth
management, construction, engineering, health care, water technology &
infrastructure.
We are well connected in the geographies of India, Germany, Italy, Switzerland, Kenya,
Burundi, South Africa, Fiji and New Zealand.

indus1advantage
M E R G E R S ,

A CQ U I S I T I O N S ,

A L L I A N CE S ,

J O I N T

V E N T U R E S