Knowledge@Wharton -- Finance and Investment
Knowledge@Wharton is an online resource that offers the latest business insights, information, and research from a variety of sources. Content includes analysis of current business trends, interviews with industry leaders and faculty, articles based on the most recent business research, book reviews, conference and seminar reports, and links to other websites.

• Is India Missing the Outbound M&A Bus?
  Not long ago the biggest names in corporate India appeared to be on an acquisition tear overseas. Tata Motors was scooping up iconic brands such as Jaguar and Land Rover, and Hindalco had bought Atlanta-based Novelis, a leading aluminum fabricator, to cite two prime examples. But after new stock issues by both companies to help finance the acquisitions fell flat, some questioned India Inc.'s ability to sustain its global buying spree. Are outbound mergers and acquisitions (M&A) a dying breed, or was retrenchment inevitable given global financial conditions?
• Is the Reserve Bank of India Settling for a Slowdown?
  The Reserve Bank of India (RBI) on July 29 announced substantial increases in both the repo rate -- the rate at which it lends funds to banks -- and the cash reserve ratio, or the proportion of deposits that banks have to set aside with the RBI. While RBI governor Y.V. Reddy has stated that these measures are necessary to combat inflation, market watchers are saying they will inevitably harm India's already moderating GDP growth. India Knowledge@Wharton spoke with members of the banking industry and faculty at the Indian School of Business about the RBI's strategy and what these hikes could mean for the Indian economy.
• Bain & Company's Sri Rajan: 'Private Equity Has to Show Indian Companies the Value It Can Bring'
  In the wake of the U.S. financial crisis, valuations of Indian firms have tumbled -- something which the private equity industry has been careful to note, according to Sri Rajan, partner and head of Bain & Company's private equity practice in India. Over the next few months, he predicts, "we'll see a lot more deal flow in India." Rajan, whose work with private equity funds includes mergers and acquisitions, post-merger integration, offshore outsourcing and assessing entry and exit risks, discussed the industry outlook with India Knowledge@Wharton at the Wharton India Economic Forum in Philadelphia.
• SKS Microfinance's Vikram Akula: 'Mobile Banking Could Be the Future of Microfinance'
  Vikram Akula, founder and CEO of SKS Microfinance, launched the company in 1998 to offer small loans to very poor borrowers. Some 10 years later, SKS has become India's fastest growing microfinance institution (MFI), with more than two million borrowers. In the next two years, Akula would like SKS Microfinance, whose backers include venture capitalists such as Sequoia Capital, to grow to eight million borrowers -- which would make it the world's largest microfinance lender, surpassing Bangladesh's Grameen Bank. In an interview with India Knowledge@Wharton at the recent Wharton India Economic Forum, Akula spoke about emerging trends in microfinance.
• Can Dalal Street Tame the Inflation Monster?
  Recent corporate results announced by Indian firms have called forth both optimism and pessimism on Dalal Street -- Mumbai's equivalent of Wall Street -- which houses the Bombay Stock Exchange (BSE). As uncertainty looms over India's economic growth for the rest of the year, the biggest fear is growing inflation, according to experts interviewed by India Knowledge@Wharton.
• Investing in India: Where Is the Smart Money Going Now?
  Investors are flocking to India, and last year net foreign institutional investment inflows exceeded $17 billion. While initially, international investors focused on technology, today they are investing in everything from real estate to infrastructure. How are companies getting into these opportunities, and how are the deals changing over time? A panel discussion at the recent Wharton India Economic Forum in Philadelphia explored the landscape and gave the audience a taste of what is to come.
• Emerging Markets: Is It Time to Cash In?
  Most emerging market economies are unlikely to de-couple from the U.S., a premise behind the sharp, brief rally in emerging stock markets last fall. Since the American economy and stock market started weakening in late 2007, so have most emerging markets. Some developing countries may provide short-term investment gains due to specific economic factors. Are these increases sustainable? In this opinion piece, Ignatius Chithelen, managing partner of Banyan Tree Capital Management, an investment firm in New York City, argues that with most gains from emerging stock markets already behind us, it may be time to sell.
• Should India Set up a Sovereign Wealth Fund? It's a Bad Idea
  Sovereign wealth funds from countries such as the United Arab Emirates, Norway and Singapore often are in the news as they invest in companies such as UBS, Merrill Lynch and Citigroup. In Asia, Singapore's Temasek fund and China's China Investment Corp. have been seeking out high-potential deals. These moves have led some experts to argue that India should set up a sovereign wealth fund to buy energy-generating assets. In this opinion piece, Vinay B. Nair, a senior fellow with the Wharton Financial Institutions Center, explains why he opposes the idea. Nair is also a senior fellow at New York University and a visiting professor at the Indian School of Business.
• Young, Rich Risk-takers: Asia's Thriving Economies Beckon Western Companies
  The boom in the economies of many Asian countries is creating opportunities for Western financial firms that hardly existed a decade ago, according to two keynote speakers at the recent Wharton Asia Business Conference. Thanks to their double-digit growth, the developing Asian economies, led by China and India, are minting new millionaires seeking managers for their money, said Renato de Guzman, CEO, ING Private Bank-Asia. They are also giving birth to new firms that are seeking merger and acquisition advice as they expand at home and abroad, according to Helge Weiner-Trapness, a managing director in Asia with JP Morgan.
• India's 2008 Budget: Few Incentives for Global Investors, but a Windfall for Farmers
  India's budget for 2008 does little to encourage foreign investment -- possibly because global capital has been pouring into India. Between April and December 2007, the country saw an increase of nearly $13 billion in foreign direct investment (FDI) and $18 billion in foreign institutional investment (FII). The primary winner of this year's budget -- presented in New Delhi by finance minister P. Chidambaram last week -- was the farm sector, which has been offered a loan write-off worth $14.8 billion. Some observers are concerned about whether this is a good idea, but others argue that the Indian economy is going strong and needs to share the benefits of growth.
• What Ails India's Initial Public Offering Market?
  Is greed killing the initial public offering (IPO) market in India? In recent weeks, several large equity offerings, including those from reputable business houses, have struggled to hit their targets. India's stock markets have been volatile amid a global credit crunch and fears of a U.S. recession, but imperfect markets are also to blame, according to Wharton professors and investment experts.
• Beneath India's Choppy Stock Markets, Index Funds Gain in Strength
  The Indian stock markets seesawed last week between fears of a U.S. recession, the Fed rate cut, President Bush's $150 billion stimulus package and a strong show by domestic investors. In a striking undercurrent, passive index funds are gaining popularity as Indian mutual funds grew 80% to $140 billion in the past year. India Knowledge@Wharton spoke with fund managers and faculty from Wharton and the Indian School of Business about the Indian mutual fund industry's recent growth, and whether active or passive investment vehicles will come out ahead.
• What's Ahead for the Global Economy in 2008? Reports from Around the Network
  Though the subprime mess and rising oil prices slammed the U.S. economy during much of 2007, other emerging markets -- especially China and India -- seem to be on a roll. China's growth rate of more than 11% is like