Foreign firms reposing greater faith in India: ASSOCHAM

Dollar Business Bureau

Indian companies finding better opportunities at home turf, says study

  Visible improvement in business confidence led to a 32% jump in the value of Mergers and Acquisitions (M&As) executed by foreign companies in India to $11.48 billion in 2014, while the year witnessed a sharp drop in the domestic firms scouting for M&As abroad, a report by the Associated Chambers of Commerce & Industry of India (ASSOCHAM) noted. The total value of inbound deals have increased by 32% to $11.48 billion in 2014 from $8.7 billion in 2013. However, outbound deals dropped by 38% in 2014 to $ 5.7 billion (111 deals) on account of good opportunities available in India, said ASSOCHAM. “The liberalised policies including the liberalised M&A provisions under the Companies Act, 2013 (yet to be effective), would be paving the way for bright future of M&A in 2015,’’ the ASSOCHAM report said. The total value of M&As as well as private equity (PE) deals involving Indian firms was up by about 26% to $48 billion during 2014. Sectors such as IT and ITES, pharma and healthcare, banking and finance, telecom, retail/consumer and real estate sectors were leading in the M&A space, whereas the e-commerce, IT & ITeS, banking, finance and Infrastructure sectors were major players in the private equity space. M&As and PE activity together added to 1,116 deals worth $48 billion involving Indian companies from January - December 10, 2014 compared to $38 billion involving 949 deals in 2013. In the private equity sphere, as many as 565 transactions valued at $11 billion were announced this year until December 10, 2014, which is up 11% compared to 2013. Domestic M&As too surged during 2014, powered by large transactions such as Kotak Mahindra Bank Ltd’s $2.4 billion takeover of ING Vysya Bank Ltd and Sun Pharmaceutical Industries Ltd’s $3.2 billion purchase of Ranbaxy Laboratories Ltd. Last month, UltraTech Cement Ltd. agreed to buy two cement plants and related power assets of Jaiprakash Associates Ltd. in Madhya Pradesh for $870 million, making it the country’s biggest cement maker. Also, the opening of FDI in new sectors and enhancing limits in sectors such as Insurance, Defence, liberalised FDI policy for real estate and infrastructure, decisions to review land acquisition policy especially in PPP based infrastructure projects, coal auction etc are the measures being taken by the government, which will supplement the increase in M & A activities in coming months, said the report. The momentum is expected to continue in 2015. “Liberalising and hiking the FDI limit in sectors such as Insurance, Defence, real estate and infrastructure, coupled with changes in the land acquisition policy especially in PPP based infrastructure projects and coal auction would open further avenues for M&As during 2015,’’ said Rana Kapoor, President, ASSOCHAM.    

 This article was published on January 9, 2015.