India recorded a total of 870 M&A transactions in 2014, a 17 per cent rise in deal volume compared with the previous year, making it the highest in volume terms over the past four years.
The aggregate disclosed deal value for the year stood at $28.6 billion, a 6 per cent rise from 2013, according to EY’s Transactions 2015, an annual review of M&A activity in India.
“Global M&A activity was markedly positive in 2014 and is expected to remain strong in the coming months, as the world economy gathers momentum. Amidst a stable political environment, India Inc. looks set to turn the corner on the back of steadily improving consumer and business sentiment as well as the ease of financing,” said Amit Khandelwal, Partner and National Leader, Transaction Advisory Services at EY.
“The inclination that the Indian companies reflected towards M&A as a growth strategy is expected to see more traction over the next few months, setting the context for strong M&A activity in 2015,” he added.
INDIAN FIRMS DOMINATE
The past year saw 494 domestic transactions being announced, with a total disclosed value of $16.2 billion, accounting for 57 per cent of the total deal volume and value. This also is the highest domestic volume and value recorded in India over the past four years.
A focus by Indian companies to consolidate their businesses was amongst the factors that helped spur domestic M&A activity. The largest two transactions that took place over the past year, illustrate this focus, EY said in a statement.
These include Sun Pharmaceuticals’ acquisition of Ranbaxy Laboratories from Japan’s Daiichi Sankyo Co. for $3.2 billion, with the second one being Kotak Mahindra Bank’s acquisition of ING Vysya Bank for $2.4 billion.
Optimism regarding accelerated growth of the Indian economy, owing to the new government’s focus on policy reforms to drive growth and highly leveraged companies divesting their assets for repayment of loans and address interest costs, were the primary factors driving the domestic M&A activity.
CROSS-BORDER DEALS
Cross-border transactions involving Indian companies displayed a mixed performance in 2014. While the deal volume stood at 376, representing an uptick of 23 per cent over the previous year, the deal value declined by 40 per cent, amounting to $12.4 billion.