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May 8, 2008 Lagging China, India eyes African markets, resources HONG KONG/MUMBAI, May 8 (Reuters) - As China pushes into Africa to tap its natural resources and consumers, India wants deals of its own there to feed a booming economy and a corporate sector hungry to grow overseas. But India is having to play catch-up as China has a tight foothold across the African continent, stretching into nearly every country in areas such as mining and oil. Indian companies realise that if they don't move quickly to expand across the globe to secure energy and customers in markets such as Africa, China is likely to get there first. "There's been a definite shift in the way Indian companies look at Africa," said Shipra Tripathy, head of the Africa desk at the Confederation of Indian Industry. "We are now big enough to foray into what was earlier perceived as a risky market. It's not just natural resources. Companies are now looking for opportunities in many sectors." China and India, the world's two most populous nations, are battling for resources to drive their roaring economies, and are going head-to-head when it comes to cross-border acquisition strategies for fast growing companies. That is the backdrop for an expected bid by India's mobile leader Bharti Airtel for a controlling stake in South African telecoms operator MTN, a company worth about $40 billion. Bharti says it is in talks with MTN, but has not yet made an offer. But investment banks are lined up to advise and finance the deal, sources say, with other global telecom players -- China Mobile included -- said to be on the fringes. China Mobile said on Thursday it has not bid for MTN, but is interested in the South Africa market. A deal for MTN would be India's largest-ever cross-border acquisition and would boost the country's presence in Africa. In March, Satyam Computer Services Ltd, India's No.4 software services exporter, announced the launch of a software development and support facility in Egypt to tap a growing outsourcing business in the Middle East and North Africa. Top Indian outsourcer Tata Consultancy Services has a business unit in South Africa. Oil and Natural Gas Corp (ONGC), Tata Steel and Tata Motors also do business there. CHINA AHEAD Industrial & Commercial Bank of China
Ltd (ICBC), China's largest bank, agreed to buy South Africa's Standard Bank
Group last year for $5.6 billion. A CLSA report from 2006 said more than 900
Chinese companies had invested in 49 African countries, from Rwanda to
Niger. In addition to oil and gas producers, African miners could come up as potential targets, and late last year Singapore Telecommunications Ltd, which owns more than 30 percent of Bharti Airtel, briefly pursued Ghana Telecom. FIRMER TIES As China has discovered, tight relations with certain Africa entities come at a price. China's relationships with Sudan have come under fire internationally, with critics saying Beijing is helping to underwrite the violence in places such as Darfur. Indeed several other risks come with overseas expansion initiatives. But with economies growing at about 10 percent a year, expansion abroad is as much tempting as it is a necessity. That China has been able to forge more relationships in Africa
is due in part to Beijing's role in partnerships abroad. Most of China's top
companies are run by the government, providing capital to finance deals. "So far they've been lagging China, obviously. The Chinese government has tended to support their oil companies much more than the Indian government does," said Rahul Singh, Citigroup analyst covering telecoms, oil and gas in India. "As far as the other growth sectors are concerned, the Indian government always left it to private sector companies to do their own thing." (Additional reporting by Tom Miles in HONG KONG, Serena Chaudhry in JOHANNESBURG, and Rina Chandran in MUMBAI; editing by Ken Wills & Ian Geoghegan) |
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