MUMBAI, SEPTEMBER 8: Buoyant on rising inbound transactions since 2011, India has emerged as one of the top Mergers and Acquisition (M&A) designations in the world in 2015. Further, favourable economic and demographic conditions and an encouraging regulatory regime have also helped in transforming India into a target market for inbound M&A in Asia-Pacific.
India attracted 6 per cent of all US outbound M&A transactions (deal volume) in 2015, surpassing the 2 per cent of outbound M&A directed at regional economic rival China, according to a study by corporate investigations and risk consulting firm Kroll.
So far in 2016, India has continued to attract US interest, with $3.1 billion through 27 deals compared with similar US investment in China at $1.3 billion and 13 deals.
“Often the challenge for investors is to understand the potentially invisible aspects of the business, to gauge the true intentions of owners and to determine how such practices get recorded in the books,” said Kroll Managing Director and Head of South Asia Reshmi Khurana.
In 2015, inbound M&A totalled 227 deals worth $19.6 billion. In the first half of 2016, 82 deals worth close to $9 billion were announced, putting the country on track for another banner year of inbound investment, the study said.
Technology, media and telecommunications companies accounted for 26 per cent of deal value and 22 per cent of deal volume since 2011 led by feverish interest in the country’s e-commerce market.
Inbound M&A in the consumer sector also saw substantial activity – 14 per cent of deal value and 10 per cent of deal volume – led by demographic factors such as the emergence of an increasingly young and working population and rapid urbanization, the study said.
The industrial and manufacturing space has also shown promise, courting 9 per cent of deal value and 22 per cent of deal volume since 2011, on the heels of the ‘Make in India’.
OUTLOOK
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.
As the pipeline of deals grows, foreign investors are reminded to deploy a due diligence process that is rigorous, comprehensive and truly independent – one that will assist them in making decisions with confidence and to be in a better position to protect such investments, Khurana added.