indus1advantageMERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
indus1advantageMERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
THE NEXT 20 MINUTES…OR SO…Mergers,Acquisitions,Alliances,Joint ventures,Collaborations,Start ups,Buy Outs.                ...
COMMON DENOMINATOR…Times Bank ;                  HDFC BankIndiaInfo / Seranova ;        Just DialTopworth marketing P Ltd ...
CAVEAT …My thoughts are • Mostly based on personal experiences • Hence Biased                                       indus1...
TAKE AWAY…• Understanding why JV’s are important• POA for Students & Practitioners• Spotting JV opportunities             ...
Why are alliances / Joint ventures Imperative?                                     indus1advantage   MERGERS, ACQUISITIONS...
ALL BUSINESSES ARE …               1. Marketing; and 2. Innovation                          Both Require                 R...
SOLUTION TO SCARCITYSolution is Sharing, Leveraging, Outsourcing and Borrowing• Strategic Alliances• Joint Ventures• Merge...
SO…                  If Mergers, Acquisitions, Alliances and                      Joint Ventures are IMPERATIVE...        ...
UNSTOPPABLE TRENDS…Strategy formulation & implementation is being impacted by 3 unstoppable trends  Globalization, Technol...
OPINION…A recent report by World Bank Vice President Otaviano Canuto   argues that developing countries will be engines of...
TWO CHALLENGES EMERGETwo challenges to business :1. The definition of strategies and partnerships that enhance   sustainab...
So what does a Typical MNC do?         (to address the challenges)                                  indus1advantageMERGERS...
HOW DO MNC’S TARGET A COUNTRY?•   Personal Experiences of Senior Managers•   Gut Feel or Anecdotal Advice / Evidence•   Co...
COMPOSITE INDEX…                                    Brazil   Russia   India    China         Growth Competitiveness     57...
WHATS WRONG WITH COMPOSITE INDEX?COMPOSITE INDICES are useful; but only when they are used a basis of drawing up   strateg...
EYES OF AN MNC…If a MNC uses such a composite index to define                 the country …   How do they finalize the ent...
HOW DO MNC’S DECIDE IF M&A OR JV OR  ALLIANCE? OR GO SOLO?GoalsStrategy                                                Dev...
QUESTIONS…                                        How close are your strength and internal resources to                   ...
TWO MORE QUESTIONS…            1. How tight an Embrace?      2. Alliance Management Capacity?                             ...
ANSWERS…Answers to questions posed in the last page…will give us a Solution !      Alliance / Outsource / Joint Venture / ...
WHATS WRONG HERE?    Even the Best of GAP ANALYSIS & COMPOSITE INDEX             STUDY leaves out Institutional voids!In e...
INSTITUTIONAL VOIDS…- Skilled Market Research Firms to      - IPR & Copyrights    understand Customer Preferences    - In ...
SO…If you look at issues with        Composite index and Institutional VoidsThe obvious answer ;“Entering emerging markets...
HAVING SAID THAT…Research suggests that multiple JV’s fail. Even merged  companies are demerged.– Frankly; this is an entr...
indus1advantageMERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
SPOTTING OPPORTUNITIESGoalsStrategy                                                     Develop Strengths?               D...
HAVE A LOOK AT INSTITUTIONAL VOIDS AGAIN- Skilled Market Research Firms to      - IPR & Copyrights    understand Customer ...
HOW TO MAKE THE MOST OF IT?                       Institutional Voids or Value chain gapsOpportunities for Investment Bank...
EXAMPLE…OF FILLING INSTITUTIONAL VOIDS!•   China Emerge Logistics    8 lane highways    but transportation system underdev...
TOSHIBA …Toshiba; Strategic Alliances as a Key Element of StrategyTo develop strategic alliances with different partners f...
SPOTTING JV OPPORTUNITIES…1. Identify Gaps – this is the opportunity.2. Spot Institutional Voids - this is where u make a ...
indus1advantageMERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
NOTESEmerging markets = Argentina, Brazil, China, Czech Republic, India, Indonesia,   Mexico, Poland, Russia, and South Ko...
Paresh ShethParesh runs an investment bank “indus1advantage” and specializes in cross border joint ventures and alliances....
“Indus1Advantage” is in the business of investment banking. While we are sector agnostic; theorigination strategy revolves...
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Paresh Sheth on Joint Ventures

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Paresh Sheth on Joint Ventures

  1. 1. indus1advantageMERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  2. 2. indus1advantageMERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  3. 3. THE NEXT 20 MINUTES…OR SO…Mergers,Acquisitions,Alliances,Joint ventures,Collaborations,Start ups,Buy Outs. indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  4. 4. COMMON DENOMINATOR…Times Bank ; HDFC BankIndiaInfo / Seranova ; Just DialTopworth marketing P Ltd ; Sell off to HNI investorsAge Marketing ; Sell Off to Competition aboveICICI Bank ; ICICI Ltd / ICICI PFS / ICICI CapitalICICI Bank ; Bank of MaduraIDBI Bank ; United Western BankIDBI Bank ; IDBI LimitedIDBI Bank ; IDBI Fortis Federal bank Life InsurancePrincipal Financial Group ; PNB, Vijaya Bank 8000 Branch AllianceFirstRand Bank ; India Start UpHBS Swiss Bank ; Managing Indian Sub in to Investment Banking indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  5. 5. CAVEAT …My thoughts are • Mostly based on personal experiences • Hence Biased indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  6. 6. TAKE AWAY…• Understanding why JV’s are important• POA for Students & Practitioners• Spotting JV opportunities indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  7. 7. Why are alliances / Joint ventures Imperative? indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  8. 8. 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 MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  9. 9. SOLUTION TO SCARCITYSolution is Sharing, Leveraging, Outsourcing and Borrowing• Strategic Alliances• Joint Ventures• Mergers & Acquisitions• Solo?? indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  10. 10. 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?” “Whats the challenge?” “How do MNC’s think and Plan?” indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  11. 11. 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 MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  12. 12. 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 MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  13. 13. TWO CHALLENGES EMERGETwo 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 MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  14. 14. So what does a Typical MNC do? (to address the challenges) indus1advantageMERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  15. 15. 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 MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  16. 16. COMPOSITE INDEX… Brazil Russia India China Growth Competitiveness 57 70 55 46 (world eco forum report) Business Competitiveness 38 61 30 47 (world eco forum) Voice & Accountability 58 33 60 10 (world bank report) Composite Risk 70 78 72 76 (100 is least risky)** Weight in Emerging 6.9% 5.2% 5.0% 4.7% Market Index***SCB indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  17. 17. WHATS 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 contextsFor example US and UK have similar Product, Capital and Labor Markets. They also have comparable network of skilled intermediaries and strong regulatory systemsSofter 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 MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  18. 18. EYES OF AN MNC…If a MNC uses such a composite index to define the country … How do they finalize the entry strategy? indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  19. 19. HOW DO MNC’S DECIDE IF M&A OR JV OR ALLIANCE? OR GO SOLO?GoalsStrategy Develop Strengths? Define Time?Strengths Gap Contract manufacturing? Money? Contract Sales? Energy?Resources Alliance? Licensing? Joint Venture? indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  20. 20. 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 / technologiesIn 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 MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  21. 21. TWO MORE QUESTIONS… 1. How tight an Embrace? 2. Alliance Management Capacity? indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  22. 22. ANSWERS…Answers to questions posed in the last page…will give us a Solution ! Alliance / Outsource / Joint Venture / Acquisition / SoloOther Factors Product / Price / Promotion / Place / Public / PoliticsThis will give us the final answer; to the kind of alliance we should strike; if at all. indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  23. 23. WHATS 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 MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  24. 24. INSTITUTIONAL VOIDS…- Skilled Market Research Firms to - IPR & Copyrights understand Customer Preferences - In country Brand perception / Preference- End to End Logistics Provider - Supplier Base & Logistics (Chinese Example) - Modes of Entry / Ownership - Civil Society & NGO’s- Manpower & Search Firms - Politics & Corruption- Lack of Specialized Intermediaries - Trade Unions - Management talent – education/english- Efficient Bankruptcy Processes - Permissible modes of entry- Financial reporting / GAAP etc - Data base vendors- Capital Markets & VC funding - Accounting Firms - Product Rating Companies like JD Power- Debt Capital Markets - Reserved Products for SME / Indigenous- Stock Exchanges / SME Exchanges - Contract Enforcing Mechanism indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  25. 25. SO…If you look at issues with Composite index and Institutional VoidsThe obvious answer ;“Entering emerging markets without local support is a folly..” Alliances / JV’s are in; Solo is definitely not worth the costs. indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  26. 26. 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 MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  27. 27. indus1advantageMERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  28. 28. SPOTTING OPPORTUNITIESGoalsStrategy Develop Strengths? Define Time?Strengths Gap Contract manufacturing? Money? Contract Sales? Energy?Resources Alliance? Licensing? Joint Venture?**Value Chain Analysis and Multiple Other ways of defining GAPs.Indus1Advantage has a proprietary model to Identify GAPs. indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  29. 29. HAVE A LOOK AT INSTITUTIONAL VOIDS AGAIN- Skilled Market Research Firms to - IPR & Copyrights understand Customer Preferences - In country Brand perception / Preference- End to End Logistics Provider - Supplier Base & Logistics (Chinese Example) - Modes of Entry / Ownership - Civil Society & NGO’s- Manpower & Search Firms - Politics & Corruption- Lack of Specialized Intermediaries - Trade Unions - Management talent – education/english- Efficient Bankruptcy Processes - Permissible modes of entry- Financial reporting / GAAP etc - Data base vendors- Capital Markets & VC funding - Accounting Firms - Product Rating Companies like JD Power- Debt Capital Markets - Reserved Products for SME / Indigenous- Stock Exchanges / SME Exchanges - Online Platforms - Contract Enforcing Mechanism indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  30. 30. HOW TO MAKE THE MOST OF IT? Institutional Voids or Value chain gapsOpportunities for Investment Bankers and Intermediaries Sure MNC’s have Expertise, Credibility & ExperienceLocalities 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 MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  31. 31. EXAMPLE…OF FILLING INSTITUTIONAL VOIDS!• China Emerge Logistics 8 lane highways but transportation system underdeveloped Multiple TollsEmerge Logistics; takes foreign companies all the way through the delivery process.Filling import papers to customer collectibles. indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  32. 32. TOSHIBA …Toshiba; Strategic Alliances as a Key Element of StrategyTo develop strategic alliances with different partners for different technologiesBecause a single company can not dominate any technology or business by itself indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  33. 33. 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 MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  34. 34. indus1advantageMERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  35. 35. NOTESEmerging markets = Argentina, Brazil, China, Czech Republic, India, Indonesia, Mexico, Poland, Russia, and South Korea indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  36. 36. Paresh ShethParesh runs an investment bank “indus1advantage” and specializes in cross border joint ventures and alliances. His clients includelarge industrial houses, multinational corporates and listed corporates. He works across multiple sectors including education, Infotech, 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 banksubsidiary 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 thesame time. He assist large companies involved in mergers, acquisitions, joint ventures, alliances, technology transfer and distributiontie 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 managementand brokerage companies and capital market investors to design their strategies, enhance profitability and establish competitive salesand risk organisations.Paresh has played a pivotal role in setting up a MNC bank, an MNC Insurance company and a financial product distribution companyamongst others as a project manager. An entrepreneur at heart; he set up his first company at the age of 21. He has subsequentlyworked for 20 years at various BFSI corporates including IDBI Bank, HDFC Sec, FirstRand Bank, Hinduja Bank Switzerland and ICICIbank in various capacities including CEO, board member and business head. He was the chairman for finance and membership for 3years at CII YI Mumbai. He is one of the few professionals to have managed a team of 7500 executives and 5 million customers. Hewas frequently involved in strategic initiatives to align the retail and wealth banking activities with the changing times and theintroduction of innovative products and services to a new customer base and different markets. He was also a part of businessprocess reengineering at IDBI Bank and represented the retail banking unit in the BPR forum. Paresh championed the customer valuemanagement 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 Mumbaifor 3 years and now is a regular lecturer at leading management schools including IIM’s. He is a regular speaker at events onEntrepreneurship, Banking, Investment Banking and Strategic Management. He is currently authoring a book on wealth management. indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES
  37. 37. “Indus1Advantage” is in the business of investment banking. While we are sector agnostic; theorigination strategy revolves around cross border deals. We assist companies involved in mergers,acquisitions, joint ventures, alliances, technology transfer and distribution tie ups. And provide ancillaryand advisory services. We also assist in raising capital.As a boutique investment bank we specialise in scouting for, understanding and bringing globalcompanies 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 newbusinesses. We also assist them in formation of trusts and companies overseas.We also offer advisory services including sales, accounting, marketing, listing guidelines and boardformation to SME’s / MME’sSectors 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, SouthAfrica, Fiji and New Zealand. indus1advantage MERGERS, ACQUISITIONS, ALLIANCES, JOINT VENTURES

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