Kotak Mahindra eyes global alliance with financial firms

Kotak Mahindra Bank is planning to sign up new overseas alliances with financial firms as the global credit crisis forces local businesses to sell stakes overseas. “Indian promoters will sell out,” said Falguni Nayar, managing director, Kotak Mahindra Capital Company, in New Delhi on Sunday. They will realise “it is a struggle to continue running the company in a down-environment and there will be greater motivation to sell.’’

The company will ally or forge informal ties with companies in the US, Europe, Australia and South Africa, Nayar said. The first partner may be from Japan, she said, declining to name the company or provide a timeframe.

“We have to do a lot more cross-border, so we are tying up with various partners. We have to have a footprint like, say, Goldman or UBS AG. To be able to match that we have to have alliances, she said. The Mumbai-based group ended its alliance with Goldman in 2006.

Kotak Mahindra, which is the fourth-ranked adviser on mergers in India last year, has slipped to 18th position in 2008, behind firms including the New York-based Morgan Stanley and the Tokyo-based Nomura Holdings. Kotak Mahindra advised Hutchison Essar last year on its sale to Vodafone Group, the biggest transaction in India.

Last week, NTT DoCoMo, Japan’s biggest mobile-phone operator, agreed to pay $2.7 billion for a 26 per cent stake in Tata Teleservices to expand into the world’s fastest-growing major wireless market.

Earlier this month, Daiichi Sankyo, Japan’s third-biggest drugmaker, completed its purchase of a controlling-stake in Ranbaxy Laboratories to tap the faster-growing market for generic medicines.

Nayar expects more Japanese companies to buy assets in India.

“They need India to grow, they did that in South Korea,” said Nayar. “They have the money and their currency is strong.’’

The value of mergers and acquisitions in India has fallen to $48 billion this year from a record $67 billion in 2007, according to Bloomberg data.