 All current M&A deal valuations fair: JM FinancialsPublished on Fri, Jun 15, 2007 at 14:40 | Source : Moneycontrol.com Updated at Mon, Jun 18, 2007 at 08:53 11832 Investors following Bharat Forge. Share this News with them.
Adi Patel , Joint Head & Co-CEO , JM Financial Limited believes that the valuations of the inbound and outbound deals are absolutely fair. He said there was no need for concern for the new issues coming into the market, from the retail perspective or even from the wholesale segment.
Q: Just a quick word on all the M&A activity that we have been seeing both inbound and outbound over the last few months. Do you think the valuations are fair for all of these deals, the way they are being done? A: Absolutely. The valuations that we have seen for the deals that have been announced in the last few months, we are quite certain that the returns expectations of the investors will be more than met. So from an overall perspective, we are quite certain that the deals have happened at fair values and the investors in the long run are going to be in the money.
Q: Allow me to ask you this one question, since the news just came out a little earlier today, that there were some wire reports being quoted that Vedanta 's open offer for Sesa Goa may be postponed a little. Is there any truth to that since that was the last deal that I can recollect that you guys have worked on that is in the official domain? A: It wouldn't be fair for me to comment on the Sesa Goa transaction because we are not managers to the open offer. So from that perspective, it would be for Vedanta to answer that.
Q: Let's draw your attention to the issue currently at hand and that's the DLF IPO, the subscriptions that the issue got and just the response generated. The disappointment really came in on the retail segment. How are you viewing the new paper that's hitting the primary market at this point in time and just in terms of the kind of money that they are looking to raise and of course the kind of response they are garnering from various classes of investors? A: We see the market being extremely bullish. In the DLF issue also I think, it's still a little while away to take a final call on the matter. But there is a huge amount of interest. All the other issues are being oversubscribed. So I don't think there is any concern as of now from the retail perspective or even from the wholesale segment.
Q: Since the entire management structure has changed at JM Financial, post its split with Morgan Stanley, what is the road ahead in terms of the kind of deals in the pipeline that you'll are working at JM Financial? How is the rest of 2007 looking, both inbound and outbound? A: Well, 2007 is looking as good as it was at the beginning of the year. We see no change in that. The inbound interest that we have got from our foreign clients is only on the increase. In fact, the trend that we see emerging out of our midcap clients in India is what is really catching our interest, the amount of money that they want to spend on acquisitions abroad; it's not just the large group like Reliance , Tatas and Birlas , but even the midcap companies who are showing a very strong interest in looking at opportunities abroad and making heavy investments in South Africa or the Middle East , even in Europe. So, we see a lot of activity on the outbound segment. There is really no slowdown on the inbound as well.
Q: Could you break it up into sectors, where is interest primarily coming from at this point in time? A: At the moment I think we are seeing a lot of activity in the auto components sector, when you are talking about outbound. We are also seeing some amount of technology clients coming back to us and with a lot of interest in acquisitions abroad.
Q: How about pharma? A: Pharma , of course, the large players have always been interested in looking at opportunities and several transactions have been announced. So, pharma of course continues as a sector, which will announce a few deals this year.
Q: The overall benchmark for a transaction would essentially be the backdrop of the valuations of a sector as a whole, are you relatively comfortable with the way the valuations are panning out in the Indian markets right now and in some of the sectors that you've actually mentioned? A: The market valuations are just fine. I don't think there is any concern on the market valuations. What might be a little bit of a concern is the expectation of a premium over and above that, considering that we are seeing a bull run right now. A premium over and above the market valuation by the promoters is something even for a joint venture or for a strategic sale. In either situation, that is really where the discussion is a little difficult. Q8: Since you are going to be working closely with companies going forward, what is it that you are factoring in terms of earnings growth for FY08 and perhaps even FY09 because some of the sectors that you mentioned are fairly capital intensive and they'll come in only in '09? A: Across sectors if you were to take a ballpark figure, we're looking at 20-25% growth. I don't see any slowdown or any reason to expect this sort of pace to crack in the coming two years. Q9: Not wanting to get too specific, but are Bharat Forge and MphasiS on your list of companies when you spoke about auto components in midcap technology specifically in terms of outbound acquisitions? A: There are quite a few companies that we are in touch with.
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Tags: Adi Patel, Joint Head & Co-CEO, JM Financial Investment, M&A, Vedanta, Sesa Goa , DLF, Reliance, Tatas, Birlas, South Africa , Middle East, technology, Pharma, premium, Bharat Forge , MphasiS |
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 May 27 2012, 11:52 | Source: CNBC-TV18  May 27 2012, 11:00 | Source: CNBC-TV18  Subscribe to Moneycontrol Newsletters |
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Excerpts from CNBC-TV18's exclusive interview with Adi Patel:
