KPMG International’s latest half-yearly global M&A survey said Indian companies saw a significant decline in outbound M&A activity in the first half of 2013 against the second half of last year.

The ‘High Growth Markets International Acquisition Tracker’ said on Tuesday that Indian companies acquired 18 companies in the developed markets in H12013, compared with 33 such deals in H22012. KPMG, however, found out that inbound M&A activity increased. Companies from the developed markets targeted 45 Indian companies in the first-half this year against 44 in the second-half of last year.

The Tracker looks at deal flows between 15 developed economies and 13 high-growth economies, including India. KPMG produces the Tracker every six months to give an up-to-date picture of cross-border merger and acquisition activity.

Utkarsh Palnitkar, Head of the Transactions & Restructuring desk at KPMG in India, said: “Slow progress of economic reforms combined with increasing inflation rates and depreciation of the Indian currency against the US dollar have had an impact on M&A activity in India. He said after a slow start in the first quarter, the second quarter of 2013 saw a resurgence in M&A activity on the back of some cross-border deals such as Apollo Tyres-Cooper Tire, Mahindra-CIE along with Unilever’s stake increase in Hindustan Unilever and the Jet-Etihad deal, which is currently underway.

“While the outlook for 2013 remains uncertain, we believe that the uptick in M&A activity as witnessed between April to June 2013 may drive a return of confidence in boardrooms as well as help in improving global investor sentiment,” Palnitkar observed.

Vikram Hosangady, KPMG in India’s Head of Transaction Services and Private Equity said, “India will remain an interesting destination for investments”. However, he felt, M&A activity is now more likely to reflect changed realities, with acquirers expected to focus more on due diligence prior to making an investment.

“It is also important for buyers to create business plans to reflect realistic assumptions and the true potential of the business. With PEs we are more likely to see control transactions, especially by global buyout firms, along with realistic valuations. For international buyers, getting a deal done in India may require greater flexibility on the deal structures,” he added.

>jayanta.mallick@thhindu.co.in

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