indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

THE NEXT 20 MINUTES…OR SO…

Mergers,

Acquisitions,

Alliances,

Joint ventures,

Collaborations,

Start ups,

Buy Outs.

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 ; Sell off to HNI investors

Age Marketing ; 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

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

TAKE AWAY…

• Understanding why JV’s are important

• POA for Students & Practitioners

• Spotting JV opportunities

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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.

Scarce Emerging Markets

• Population

• Eco Growth

Environmental change; dynamic environments; less predictable

Environment complexity; large number of external factors

Resource scarcity;

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 MNC’s think and Plan?”

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

HOW DO MNC’S 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

COMPOSITE INDEX… Brazil Russia India China

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

Market Index***SCB

6.9% 5.2% 5.0% 4.7%

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

HOW DO MNC’S DECIDE IF M&A OR JV OR

ALLIANCE? OR GO SOLO?

Define

Gap

Goals

Strategy

Strengths

Resources Alliance?

Joint Venture?

Contract manufacturing?

Contract Sales?

Licensing?

Develop Strengths?

Time?

Money?

Energy?

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

ANSWERS…

Answers to questions posed in the last page…will 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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

- IPR & Copyrights

- In country Brand perception / Preference

- Supplier Base & Logistics

- Modes of Entry / Ownership

- Civil Society & NGO’s

- 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

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 / JV’s are in;

Solo is definitely not worth the costs.

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

HAVING SAID THAT…

Research suggests that multiple JV’s 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 day…Right now lets see if there

is an action plan we can form to enable JV’s / Alliances /

M & A’s and act as a catalyst for MNC entry.

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

SPOTTING OPPORTUNITIES

Alliance?

Joint Venture?

Contract manufacturing?

Contract Sales?

Licensing?

Develop Strengths?

Time?

Money?

Energy?

Define

Gap

Goals

Strategy

Strengths

Resources

**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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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

- IPR & Copyrights

- In country Brand perception / Preference

- Supplier Base & Logistics

- Modes of Entry / Ownership

- Civil Society & NGO’s

- 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

- Contract Enforcing Mechanism

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

indus1advantage

M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 MNC’s 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

EXAMPLE…OF 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E S , J O I N T V E N T U R E S

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M E R G E R S , A C Q U I S I T I O N S , A L L I A N C E 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 C Q U I S I T I O N S , A L L I A N C E 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.

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 IIM’s. 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 C Q U I S I T I O N S , A L L I A N C E 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 SME’s / MME’s

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.