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India M&A Opportunities

India has been a hot market for Mergers & acquisitions for global companies, reasons being:

  • Entry in Developed Markets: Outbound M & As help the Indian companies to tap the global developed markets.
  • Technology transfer: Main Reasons to do M & As. This helps Indian companies in gaining access to more developed and advanced technologies.
  • New Product Mix: To Expand product wise and market wise, becomes profitable for companies to manufacture products themselves which were not possible earlier due to cost constraints or requirement of huge investments. Such alliance give them the right to sell and diversify their product range.
  • Hedging Country Risks: Merger and Acquisitions are also attempted to reduce the reliance on the Indian markets and escape the local business cycles.

This makes India a highly sought after destination for M&A deals. But, it also makes it more vulnerable to the impulses and uncertainties of the global economic scenario. Considered to be the lifeblood of Indian business now, it needs the support and constancy to ensure that it remains progressive in the coming years.

Experts say that various reform measures promised by the new government, including on foreign investment caps, should accelerate the merger and acquisition activities in India in the New Year which has remained somewhat subdued for last few years amid slackened economic growth momentum.

Experts believe the uplift in sentiment is likely to boost M&A activity in 2015 as many deals that have been in the making over the last six months or so are expected to close or be announced in 2015. Moreover, the second half of 2015 would see the deal activity really pick up momentum.

Sector-wise, in terms of number of deals, the "technology sector, industrial and consumer products would continue to be attractive in 2015, while in terms of value contribution, one could see increased traction in telecom, financial services and asset heavy industries such as oil and gas

E-commerce is the most attractive area with a larger number of both domestic and cross-border deals. Fund raised by Flipkart, Proptiger, Bigdecisions.com & Primaseller in recent times shows the high interest of investors in this sector. Snapdeal is also planning to raise more funds. Zomato is also plannig to raise fund to the tune of $100 mn after strategically entering into American market with the acquisition of “urbanspoon.com”. Indian company Nitin Fire Protection is also planning for acquisitions in European continent. Eventually the fund raised by these companies is likely to be invested in long term strategic investments in India, which can prompt more strategic consolidation in the sector.

Opening of FDI in new sectors and enhancing limits in sectors such as Insurance will be helpful as would be the easing labour laws etc, adding the government has also launched the 'Make in India' campaign, India witnessed a series of deals in which foreign funds invested in the India consumption story, through ecommerce and mobile/ web enabled businesses. Another interesting aspect was the much awaited exit opportunity that the market euphoria has provided, resulting in quite a few IPO exits and more in the pipeline.

The year 2015 is likely to see higher M&A activity, especially in PE and inbound segment if the growth momentum builds up and the government brings in real reforms. In the 2015 budget the new Government may bring about PE & VC-friendly reforms, so that the right amount of capital enters India to support excellent initiatives like smart cities, make in India, infrastructure investing and support for entrepreneurship.

All of the above data is a part of a recent report concluded by AJSH & Co, wherein Mr. Ankit Jain is one of the partners.

Besides that following are the Major M & A deals announced in the year 2015, which are yet to conclude:

S.No. Name of the Aquirer Expected Deal Size Target Company Type Industry
1 Amazon.com 2B USD Blue Dart Express Limited Inbound Logistics
2 Alibaba.com 575M USD One97 Communication(Paytm) Inbound ecommerce
3 Carlyle Group and TPG Capital 100M USD Allied Blenders & Distillers (ABD), makers of Officer’s Choice whiskey, Inbound Beverages
4 Snowman Logistics NA Two companies in Food Processing Domestic Warehouse & Cold Chain
5 Tech Mahindra 240M Sofgen Holdings, Switzerland Outbound Information Technology
6 Balaji Telefilms N.A. Marinating Films Domestic Media & Entertainment
7 Majesco Inc ( US arm of Mastek Ltd.) N.A. Agile Technologies Outbound Information Technology
8 Nihon Nohyaku N.A. Hyderabad Chemicals Ltd Inbound Chemicals
9 Pricol Limited N.A. Mellin do Brazil Outbound Auto Component
10 Tata Power N.A. Ideal Energy Projects Domestic Power

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