Achhe din: Merger and acquisitions are picking up

NEW DELHI: Call it the Modi impact. After years of suppressed investment environment, India Inc is showing signs of revival with a spurt in merger and acquisitions (M&A) cases.

Fair play regulator Competition Commission of India (CCI) used to hardly get four to five cases of M&As for approval every month in the past few years. "In the last three months, we have seen that number double to almost 10 a month. These are green shoots of revival and a spurt in investment activity," a senior CCI official told TOI.

Under the Competition Act, CCI's nod for M&As is needed when the target company has assets of over Rs 250 crore and an annual turnover of more than Rs 750 crore. CCI then examines whether such a merger could create a monopoly and affect competition.



India had witnessed a slump in economic activities in past few years due to a virtual policy paralysis during UPA-II. But, the sentiment improved after a "business-friendly" government under Narendra Modi got elected with a clear majority.

Ernst & Young had recently said in FY14, the Indian M&A market registered an aggregate disclosed deal value of $22.6 billion, representing an increase of 12% against $20.1 billion in the previous year. "The number of M&A transactions involving Indian companies was relatively muted in FY14, which stood at 674, down by 20% against 843 deals seen in FY13," an EY report had said.

The trend is changing now with Modi heading a stable government. The spate of M&A proposals received by CCI in the past two to three months shows that both domestic and foreign investors are lining up for better days ahead.

Patricipatie Maatschappij Buitenland BV and HZPC Holland have sought CCI's nod to acquire 40% shares in Mahindra Investments (International) Pvt Ltd (a M&M subsidiary) that is engaged in seed potato business.

Mauritian investment holding company, Bluewater, wants clearance to acquire 32.3% stake in Laurus, an Indian company involved in R&D and manufacture of active pharmaceutical ingredients. The CPP Investment Board Singaporean Holdings has sought CCI's nod for subscribing the compulsorily convertible shares of L&T Infrastructure Development Projects. Japan's Mitsubishi Hitachi Metal Machinery and Siemens have sought clearance to form a JV here for creating metal plant building solutions.

A subsidiary of Singapore's global private investment group TPG wants to pick up 34.5% stake in US BPO Sutherland's four indirect subsidiaries in India. One of Sutherland's subsidiaries is Apollo Health that provides BPO services to health insurance companies and hospitals. There has been a spurt of activity within Indian companies as well. Birla Sun Life Mutual Funds has asked CCI to approve its acquisition of the right to manage and administer schemes of ING Mutual Fund. Similarly, BSE has asked for clearance to merge United Stock Exchange of India with it.

InterGlobe Aviation, holding company of low-cost airline IndiGo, wants to merge the US-based holding company Caelum into it. IndiGo's co-founder Rakesh Gangwal had invested in the airline through Caelum Investment and now IndiGo wants its 49% FDI freed up for fresh investment.