India Inc eyes 50 per cent jump in M&A deals next year

Corporate India’s boardrooms seem to have turned a little quieter this year on deal-making with the value of mergers and acquisitions (M&A) dipping to $20 billion, but experts foresee a bounce back in 2016.

The value of deals has dipped more than 40 per cent from $33 billion clocked in the previous year 2014. Consultants and analysts are anticipating deals worth more than $30 billion in 2016.

Experts believe that the much-needed impetus to M&A deal activity can come from the changes in the country’s regulatory framework such as a new bankruptcy law, faster pace of approvals and the relaxed FDI norms for many sectors, including multi-brand retail, telecom, insurance and defence.

According to global consultancy major PwC, the M&A activity by value in 2015 stood at around $20 billion, as opposed to almost $33 billion in 2014.

The fall in deal value, can be attributed to lesser number of domestic deals, stretched corporate balance sheets and costlier foreign assets, largely due to a depreciating rupee.

In 2014, domestic deal volumes had gone up significantly at around $19 billion with a number of big ticket transactions such as Sun-Ranbaxy and Kotak Bank-ING Vysya deals among others, but the case was different this year as it saw only $7.3 billion of domestic M&A transactions.

According to global deal tracking firm Merger Market, technology firms attracted an unprecedented level of activity in 2015 with 80 deals compared to just 45 in 2014, and with the value increasing to $5.1 billion as against $5 billion. Other sectors that were highly active include transport and energy, mines and utilities.