Mergers & acquisitions and private equity momentum in India is possibly at the early phase of what it could be in years to come.
India’s contribution to the global Mergers & Acquisitions (M&As) activity has been on the rise since 2004. We had a share of 1%, amounting to $10 billion in 2005 and the same has risen by leaps and bounds over the past few years. The ratio of inbound to outbound M&A, is also undergoing a change now as more and more Indian corporates set their eyes on setting global businesses.
Just to give you some figures, the total number of M&A deals announced in November 2007 stands at 58 with a total announced value of $0.94 billion as against 51 deals amounting to $0.61 billion in October 2007. The total number of M&A deals during the first 11 months of 2007 stands at a mind-boggling 638, with an announced value of $50.79 billion.
Even Private Equity investments in Indian
companies have seen significant activity in the recent past. The total number of Private Equity deals announced during November 2007 stands at 38 deals with an announced value of $2.3 billion, as against 43 deals amounting to $1.81 billion in October 2007. The total number of PE deals during the first 11 months of 2007 stands at phenomenal 374, with an announced value of $15.92 billion. With buoyant capital markets, strong performance by Indian corporates in sectors ranging from metals, infrastructure, auto, telecom, among others and strong possibilities to integrate globally, this momentum is only expected to increase.
We have strong potential with continuing labour cost advantage and with increasing efficiencies and IPR orientation, the case is only expected to strengthen with integrated Indian companies becoming much more competitive in other developed markets.
On the reverse, with increase in domestic consumption and the offshore integration logic standing strong, we would probably see captive efforts on the rise or India footprints, key to any MNC strategy.Supporting some of the above mentioned arguments is also market conditions in the developed countries like the US and the Eurozone and relative investor exposures within emerging markets like Brazil, China and India. India seems well positioned in that context. The world is clearly looking and welcoming India today and it would only be opportune to capture this opportunity to its best.
Thus, the M&A and Private Equity momentum in India is possibly at the early phase of what it could be in years to come. The mid market deal counter is expected to be particularly buoyant on back of strong balance sheets and buoyant markets in India. The year 2008 may however see some challenges, particularly to the larger deals, banking on support from offshore debt, especially Leverage Buyout situations.
The coming years will also experience reflection of integration efforts on the deals that have culminated in the last few years, many of which were maiden efforts for Indian corporates. Thus we will see results of M&A efforts by Indian corporates abroad, and it would be interesting to follow that, for long term sustainability and M&A momentum is bound to be somewhat influenced by such results.
On the whole, the Indian owner and manager, is today certainly thinking beyond India and with the spirit of Indian entrepreneurship and quality of management, which is getting acknowledged by the best corporates globally; we, as an economy, are on a very sound footing in the global M&A parade…
India’s contribution to the global Mergers & Acquisitions (M&As) activity has been on the rise since 2004. We had a share of 1%, amounting to $10 billion in 2005 and the same has risen by leaps and bounds over the past few years. The ratio of inbound to outbound M&A, is also undergoing a change now as more and more Indian corporates set their eyes on setting global businesses.
Just to give you some figures, the total number of M&A deals announced in November 2007 stands at 58 with a total announced value of $0.94 billion as against 51 deals amounting to $0.61 billion in October 2007. The total number of M&A deals during the first 11 months of 2007 stands at a mind-boggling 638, with an announced value of $50.79 billion.
Even Private Equity investments in Indian
companies have seen significant activity in the recent past. The total number of Private Equity deals announced during November 2007 stands at 38 deals with an announced value of $2.3 billion, as against 43 deals amounting to $1.81 billion in October 2007. The total number of PE deals during the first 11 months of 2007 stands at phenomenal 374, with an announced value of $15.92 billion. With buoyant capital markets, strong performance by Indian corporates in sectors ranging from metals, infrastructure, auto, telecom, among others and strong possibilities to integrate globally, this momentum is only expected to increase.We have strong potential with continuing labour cost advantage and with increasing efficiencies and IPR orientation, the case is only expected to strengthen with integrated Indian companies becoming much more competitive in other developed markets.
On the reverse, with increase in domestic consumption and the offshore integration logic standing strong, we would probably see captive efforts on the rise or India footprints, key to any MNC strategy.Supporting some of the above mentioned arguments is also market conditions in the developed countries like the US and the Eurozone and relative investor exposures within emerging markets like Brazil, China and India. India seems well positioned in that context. The world is clearly looking and welcoming India today and it would only be opportune to capture this opportunity to its best.
Thus, the M&A and Private Equity momentum in India is possibly at the early phase of what it could be in years to come. The mid market deal counter is expected to be particularly buoyant on back of strong balance sheets and buoyant markets in India. The year 2008 may however see some challenges, particularly to the larger deals, banking on support from offshore debt, especially Leverage Buyout situations.
The coming years will also experience reflection of integration efforts on the deals that have culminated in the last few years, many of which were maiden efforts for Indian corporates. Thus we will see results of M&A efforts by Indian corporates abroad, and it would be interesting to follow that, for long term sustainability and M&A momentum is bound to be somewhat influenced by such results.
On the whole, the Indian owner and manager, is today certainly thinking beyond India and with the spirit of Indian entrepreneurship and quality of management, which is getting acknowledged by the best corporates globally; we, as an economy, are on a very sound footing in the global M&A parade…
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist)
No comments:
Post a Comment