M&A deal sizes to touch $80-billion this year
The spurt in mergers and acquisitions (M&A) activity being witnessed since the last couple of years, involving Indian companies, is expected to touch a combined deal size of $100 billion next year, said Devinjig Singh, head (M&A), Citigroup Global Markets India Private Limited.
During the first half of the current year, it touched $56 billion, which was evenly divided between both inbound and outbound deals. The same is expected to reach $80 billion by this year end, according to him.
Speaking at a panel discussion on ‘Indian M&A Activity – Innovations and Challenges’ at the Indian School of Business(ISB) on Saturday, Singh said the biggest change that took place in the mindset of Indian corporates in recent times is to view M&A as part of their corporate growth strategy, which was never the case before.
While the M&A area is bound to witness increased activity in the days to come, more of it would belong to outbound buyouts (Indian corporates acquiring overseas companies), he said.
“The domestic consolidation, including minority buyouts by established MNCs among others, will continue. India, however, is yet to mature as a sellers market, resulting in less activity in terms of inbound buyouts, he said.
“Inbound M&A is slow as there are no potential sellers in India. There are no sellers because Indian companies consider that the scope for their growth is abundant,” he said, while pointing out the fact that close to 90 per cent of the private equity (PE) coming in to India is in the form of growth capital.
According to Preet Man Singh, director (corporate finance) at KPMG, the Indian capital markets have been rewarding M&A activity at least in the short term.
However, exaggeration in valuations of companies, mostly coming from commercial due diligence, has been cited as one of the challenges arising in the Indian M&A activity, by several panelists including Preet Man Singh.
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