The deal street is buzzing once again with the country attracting $ 9 billion of inbound M&A deals in the first half of 2016 as compared to $ 19.6 billion for 227 deals in the entire 2015.
According to consulting firm Kroll, technology, media and telecommunications companies accounted for 26% of deal value and 22% of deal volume since 2011 which was led by feverish interest in the country’s e-commerce market.
Inbound M&A in the consumer sector also saw substantial activity with 14% of deal value and 10% of deal volume – led by demographic factors such as the emergence of an increasingly young and working population and rapid urbanization. The industrial and manufacturing space has also shown promise, courting 9% of deal value and 22% of deal volume since 2011, on the heels of “Make in India” campaign to attract further overseas investment.
What is more interesting is that, India has attracted 6% of all US outbound M&A transactions (deal volume) in 2015, surpassing the 2% of outbound M&A directed at China that year. So far in 2016, India has continued to attract US interest, with US$3.1bn through 27 deals compared to similar US investment in China at US$1.3bn and 13 deals.
The country is among top M&A markets in emerging Asia as economic growth is reviving.
The general sentiment among foreign investors for Indian investment opportunities remains strong, creating a bright outlook for inbound M&A through the rest of this year and into 2017.
The overall foreign direct investment (FDI) in the country reached a peak in 2015 as many sectors were opened up as well as the FDI cap for some sectors were enhanced.
According to the consultancy firm, to mitigate investment risk and uncover instances of bribery and corruption in India, investors must undertake a higher level of deal due diligence than they may be used to. This includes, qualitative assessment of an entrepreneur or business owners background, reputation, political connections, ethical standards, and business practices as well as understanding of the full dynamics of the industry and business environment.
By Vishwasjeet Singh – vishwasjeet@estrade.in
Inbound M&As pick up as first half of 2016 saw 82 deals worth $ 9 bln
