Merger & acquisition (M&A) activit, which was adversely impacted in the past years, is set to pick up pace in India under a stable and decisive government at the centre, according to experts.
A government without the mercy of coalition partners would boost business confidence and bring in policy changes that would ultimately kick start M&A activities, they said.
M&A activity has seen a year-on-year drop of 16 per cent in terms of volumes and 20 per cent in value despite the announcement of a clutch of billion dollars plus towards 2013-end, according to Grant Thronton.
With the new government likely to the put emphasis on infrastructure growth, several sectors could witness explosive growth and foreign investors would be keen to look at assets in India, experts said.
“The new government with stable formation will be a big positive. This will be a significant boost to stability and business confidence. Financial investors who were not active will now look at opportunities across sectors,” said K Balakrishnan, Chairman Kriscore Financial Services and former Chairman of boutique investment bank Lazard India.
“The expected focus of the new government on infrastructure will revive fortunes of companies in steel, power and cement industries, leading to many acquisition opportunities. Road sector players, which are mired in liquidity problems, will be a natural target for M&A. Indigenization of defence will also receive a big push. This will give rise to M&A opportunities in the defence sector, “said Mahesh Singhi, MD, Singhi Advisors, A Mumbai based investment banking firm. India Inc. is also expecting lot of policy changes that can accelerate the pace of M&A activities. “The new government will take initiative on the policy front and I think that will be the key driver for growth. One hopes that the new government will allay fears of foreign investors. Things will take time to improve ,” said Mr. Balakrishnan.
“The rigidity surrounding sectors in which foreign direct investment will be permitted is expected to be significantly diluted. More sectors will open up and the rigidity in choice of instruments will also get fully diluted. As these two liberalisations happen, a flood of international money will come in,” said Shailesh Haribhakti, Chairman, Desai Haribhakti Group, Mumbai-based consultancy firm.
