For emerging market predators, these are busy times: equity and debt markets are offering cheap capital. Bond issuance has set new records, while the yield spread on JPMorgan's EMBI+ index has narrowed to its tightest over US treasuries since June 2008, at just 2.57 percentage points, down from almost 7 percentage points in March 2009 and a fraction of the almost 17 percentage point peak in 1998. For the moment, it is state-controlled companies – such as India's Oil and Natural Gas Corporation and China's CNOOC – doing much of the bidding, as governments look to secure energy resources to fuel their growing economies.
A KPMG report shows that emerging market companies stepped up acquisition activity into developed markets during the last six months of 2009. It recorded 102 emerging-to-developed deals, compared with 78 in the first half. By comparison, the number of developed-to-emerging deals fell for the fourth consecutive six-month period. If India's boldest private predators did not now have their tails between their legs – with the exception of Bharti Airtel and Reliance Industries, both still keen to globalise – the eastwards shift would be more marked.
The fact that some of India's biggest firms stumbled when they ventured overseas has prompted some caution. The sight of Tata ruing the price it paid for Corus and Jaguar Land Rover, for example, and of Aditya Birla group's Hindalco subsidiary blowing $6bn on Canada's Novelis in the bubble days of 2007 has been sobering. India dominated emerging-to-developed deals up until 2008. But China now leads the way, recording 30 deals in the second half of 2009 while India registered just 25 deals in the whole year. If poor M&A returns are any guide, this may be one rivalry Indian companies can afford not to indulge in.