It is substantial and growing. It consists of both equity and loans. For the latest year for which RBI data is reported, share of equity and loans is equal, almost. Otherwise for the past few years, it consisted of mostly equity. Indian businesses are buying other businesses abroad, particularly in developed countries. For investment in developing countries, they opt for joint ventures and wholly owned subsidiaries.
The reason for this difference is that mature markets in developed countries do not require promoters' equity. At the same time, to reach the scale of operations worth mentioning, an acquisition is the quickest way. Developing countries still require indigenous investment for reasons of control. Indian FMCG firms have gone for many acquisitions in the recent past. Individually they are not spectacular but together, they do add up to an important trend.
The reason for this difference is that mature markets in developed countries do not require promoters' equity. At the same time, to reach the scale of operations worth mentioning, an acquisition is the quickest way. Developing countries still require indigenous investment for reasons of control. Indian FMCG firms have gone for many acquisitions in the recent past. Individually they are not spectacular but together, they do add up to an important trend.
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