Indian corporates sign $52 bn M&As in 2016; 2017 looks promising too

The Dollar Business Bureau

The current year is abuzz with deal activities with mergers and acquisitions (M&A) worth more than $52 billion and the numbers may get even larger in the new year with increasing interest of foreign investors in the Indian businesses.

Industry experts said 2016 saw an increase in deal value mainly led by big transactions and consolidation in several sectors while adding that the same trends may get carried into 2017.

The new year looks quite promising with regards to domestic, outbound as well as inbound deals.But it is also dependant on the macro-economic reforms and trends in sectors such as infrastructure, power, that the government improves. 

According to the consultancy major Ernst & Young (EY), the overall quantum of a value of deals announced in 2016 is estimated at $52.6 billion, which is considerably higher compared to $31.3 billion in 2015. However, the deals count dropped to 756 deals from the previous year’s 886 deals. 

Ajay Arora, Partner, Transaction Advisory Services, EY said that M&A activities next year is expected to remain positive due to the continued interest of strategic and financial investors in the Indian economy. Sectors such as financial services, technology and life sciences are likely to attract a significant attention of the investors next year too. 

Experts believe that in the short-term there could be a little slowdown in the activities of M&A but in the medium and long term, the recent demonetisation by the government and Goods and Services Tax (GST) implementation will serve as a catalyst to boost deal activity in the coming years. 

While all the experts agree that the activities of M&As activity may get a further boost next year, others like Pricewaterhouse Coopers (PwC) and Grant Thornton have estimated the 2016 deal numbers to be lower at $44.6 billion and $35 billion, respectively. 

Sanjeev Krishan, Transaction Services Leader at PwC India said that the outlook for 2017 looks healthy. “We are expecting that the activity of global corporate buyers to pick up and India remains to be in focus among the emerging markets worldwide - chemicals, industrials, technology, and pharmaceuticals are likely to witness larger inbound activity.” 

Prashant Mehra, Partner, Grant Thornton India, said, “As GST and other major economic reforms will play out next year, it is expected that there would be a further increase in domestic M&As, led by the consolidation need in core sectors.”