Inbound M&A deals may pick up in H2: BMR Advisors

MUMBAI: Despite a decline in merger and acquisition deals in the first 6 months of 2013-14, improving global economic conditions and a moderation in valuation of domestic companies are expected to boost inbound M&As in the second half of the fiscal, says an expert.

"There is a clear rising trend in corporate M&A activity which we are seeing now," BMR Advisors partner Vivek Gupta told PTI.

He said the published deals have been lower in H1 as against last year.

"The extent of drop in deals was unexpected and it seems the fundamental weakness in the domestic growth story could be a significant contributing factor," BMR Advisors said in a report on M&As during the April-September period.

The average quarterly deal value in H1 stood at $ 6.6 billion as against $ 7.2 billion in the same period last fiscal.

Gupta said inbound deals, which remained muted in H1, are witnessing some activity now on account of demand from certain geographies.

"I would say activity is concentrated on cross border inbound deals. There is demand coming from Japan, the US and Germany due to improved economic conditions," he said.

In the first half of this fiscal, the average quarterly inbound deal value stood at $ 1.4 billion, as against $ 2.6 billion. The average deal size stood at $ 42 million, as against $ 47 million last year.

"Valuation expectation of domestic companies have tempered which has also generated some demand," Gupta said.

He further said the inbound M&A demand is not specific to some sectors but across the board.

The forthcoming general elections may have some impact on large M&As, but medium and small size M&As will continue to happen, Gupta said.