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August 29, 2012

Corporate Japan's Craving For Indian Assets

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Note: The above data from the Venture Intelligence M&A Deal database includes only majority control transactions and does not include minority investments like Nippon Life's 26% stake acquisitions in Reliance Life and Reliance Mutual Fund.

From a recent Business Today article:

Arun Goyal, Minister (Economic and Commercial) at the Indian Embassy in Tokyo, says: "Today, 850 Japanese companies are active in India. There were only 200 around four years ago."

Small Japanese companies have woken up to India, too. Much of this interest in India is due to Japanese companies' disillusionment with China. Jun Hemmi, Executive Director of Edelweiss Tokio Life Insurance Company, who was the first CEO of Iffco Tokio General Insurance Company nearly a decade ago, says China is a challenge for Japanese companies. "We have not been best of friends," he says. "It's like an Indian company trying to sell retail products in Pakistan. India is where we want to be for growth." He adds India's regulatory regime is fairer than China's, and the state-owned Life Insurance Corporation of India will not have an unfair advantage over private insurers.

Hemmi says Tokio Marine, which manages large pension funds in Japan, would like to invest some of that money in India. The exchange rate is a worry, though. "In 2000, a rupee equalled three yen, but now it is less than 1.5 yen," he says. However, he adds that India, like any democracy, works at its own pace, and Japanese companies are fine with that.

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