Managing Director and Head of Corporate
Finance/Investment Banking, Greenwich Equity Group, LLC Greenwich, Connecticut.
Good morning and welcome to New York. My name is Anne Carley and I am a Managing Director with Greenwich Equity Group and Head of
Corporate Finance/Investment Banking. My area of expertise is technology and
bio-technology. I am also a managing director with Greenwich Advisors our asset
management company and I am happy to announce that we are launching our first
single country fund, Greenwich Advisors India Select Fund, and that country is
India.
Back in 1999 I was meeting with a client who is a CEO of a mid-size
Technology company and he was telling me that he was moving a large portion of
his research and development team to Bangalore. I had no idea where Bangalore
was or what country it was in. I asked him why Bangalore and he went on to tell
me that Bangalore was located in India and had a large pool of young, highly
trained, English speaking, engineers who were diligent, hard working,
entrepreneurial, and much more cost effective than American or European
engineers. I began to do some research and found that many other CEOs of
Technology companies were also looking at Bangalore. I also discovered that
Bangalore was quietly becoming the Technology centre for the well informed.
During the go go years of the 1990s if you were a Technology company or had.com
in your name Wall Street was throwing money at you. Many companies that went
public did not have a business plan or even a product. Countless technology
company’s thought that this would never end and rested on their laurels, if they
had them and did not plan ahead or even look into improving their products or
expanding their lines of business. When the tech bubble burst in 2001 numerous
companies were not able to continue without the huge supply of money they had
been receiving from Wall Street and the dot com’s turned into dot gones. This
was not just small companies but also many large companies. One of the darlings
of the 1990s was CMGI. CMGI had a market capitalization of over $ 20 billion
dollars and had a stock price of over $ 100. In one deal alone we raised $ 240
million dollars for them. Today CMGI is trading around $ 2 per share. Many of my
clients were not prepared for the lean years ahead and went out of business.
Even some of the household names of the 1990s like CMGI are worthless.
Technology is a very hard business as companies have to constantly be improving
their products and expanding their product lines. This is not a static business
and if you do not keep up with your research and development your company will
become obsolete and ultimately go out of business. New companies are constantly
threatening existing companies and research and development is very important to
keep their products fresh and cutting edge. There is always someone with a new
idea or a better way to do something. During this time companies that had not
moved there research and development teams to India had to cut back on their
research and development and this hurt them as they were not able to keep up
with the demands of a constantly changing marketplace and ultimately became
obsolete. This was true for all companies regardless of size. Many household
names such as GE, Intel and Microsoft to name a few sent large portions of their
research and development departments to India. GE has one of the largest
research and development divisions in Bangalore and this division has more
patents than any other division in the world. About three years ago I started to
see that the Carlyle group, Blackstone and others were beginning to look at
India as not only a technology centre but to really also take a look at many of
the other sectors and companies that were in India. Most Americans when they
think of India think of Call Centres, Technology and Cows. This is not true.
India has a very diverse economy which is made up of numerous sectors such as
metals and mining, telecommunications, banking, manufacturing, retail, energy ,
technology and agricultural. India has companies that are in all sectors and not
just the large companies that we all know like Tata, Reliance, Infosys and Wipro.
India has many companies that are very well run and profitable as the Indian
banks are not as free and easy to lend money to companies without revenues and a
strong business plan. Companies in India must be profitable and be able to
sustain themselves as capital will not be easy to obtain for them. Indian
companies are some of the best run in the world as they have always had to self
fund and not rely on investment bankers or banks for funding. This makes for
very strong companies with strong balance sheets who are well able to build
divisions or buy if the need suits them. The larger American investment groups
have started to notice this and have been investing large amounts of money in
India. They have realized that India is a great place to find companies that
could be acquired by American companies to round them out or build out divisions
and India is also a great place to find companies that could be put together to
make one large company. We are starting to see large amounts of money coming
into India in the private equity area. We are also beginning to see that large
Indian companies are also looking toward America for acquisitions. Look at the
recent Vitamin Water deal in which Tata bought Vitamin Water last year for $ 677
million and just sold it to Coca Cola for $ 4 billion just last Friday. So here
is an Indian company buying an American Company and selling it back to another
American company. The world is changing and as Thomas Friedman said “The world
is Flat” and in order to compete in this global economy companies are going to
have to have a global presence and borders are going to be meaningless. There is
no such thing as an Indian company or an American company. This cross boarder
pollination is going to continue and grow stronger and all companies will have
to be multinational if they are going to stay competitive. Most of the large
corporations are well able to get into other markets but many of the mid-sized
and smaller companies are going to need help to position their companies in the
global marketplace. Many American companies realize that in order for them to
stay competitive and survive in the new economy they are going to have to set up
operations outside of the USA. The problem they face is how to get there. They
are going to need lawyers, accountants and bankers to help them navigate the
international waters. Help in finding companies for acquisition, help evaluating
the companies and structuring the transaction. They are also going to need help
in finding partners to work with and help in setting up divisions. As the rest
of Wall Street begins to look toward India as not just an outsourcing
destination but as a viable source of strong companies in all sectors and not
just technology they are also going to need guidance on how to deal in India.
This works both ways as smaller Indian companies are also going to need to
branch out and come to the United States. There are many interesting companies
in the United States that would make great counterparts for Indian companies.
There are many opportunities for Indian companies to expand their product mix
and buying an American company or partnering /setting up a division here in the
USA could add substantial value. The importance of being a global company and
learning how to deal with or sell to the world is vital to the survival of all
businesses. We have already begun to see many large cross border transactions by
Indian companies and we are going to be seeing a lot more of them. Indian
companies can no longer afford to stay just in India and they are also going to
need help getting to the USA. This is a very exciting time and a very important
time. The economy is changing and the way we do business is changing and
everyone must change with it. The world has changed and India is going to be a
super power. Like it or not if you are not doing business in India you will be
left behind.