India’s smaller companies go on a buying spree

SAPAT TEA IS a classic Indian growth story in the making. Privately run and awash with cash after a decade of strong domestic growth, the country’s third-largest tea maker and blender is on the hunt for foreign acquisitions. Armed with a war chest of more than $60 million, Mumbai-based Sapat wants to buy at least two high-end tea brands over the next 12 months – one in the US (its budget: $20 million) and one in the UK (budget: $40 million). Its management will finance the deals around 50% with cash, with the rest funded by a mixture of leveraged buyouts and, says Sapat’s managing director, Nikhil Joshi, "a sprinkling of private equity". Sapat isn’t particularly large: Joshi declines to reveal the privately run, unlisted company’s finances, although he says that by 2010 he wants Sapat’s annual revenues to more than quadruple, to between $150 million and $200 million. But...