M&A deal activity likely to revive in sectors like telecom, aviation and retail in 2014: Grant Thornton

NEW DELHI: Merger and acquisition activities of Indian companies decelerated in 2013, but this year the momentum is likely to pick up, particularly in sectors like telecom, aviation and retail, a Grant Thornton report says.

Momentum in the Indian deal street is expected to pick up in 2014 after the general elections as inbound deals, which were pushed back for a better clarity on the policy stance of new government, are likely to take place.

According to Grant Thornton, in 2013 there were a total of 500 deals worth around $ 28 billion, much lower than the deal volume shown in the previous two years.

In 2012, there were 598 deals worth $ 35 billion, while in 2011, there were 644 transactions worth $ 45 billion.

"Looking ahead at 2014, we are moving into an election year and that brings in its own share of uncertainty. However, the Indian M&A market has now reached a significant level of about a 1,000 deals a year pointing to continued confidence of India Inc in M&A," Grant Thornton India LLP Partner-India Leadership Team Harish HV said.

The sectors that looks most bullish in 2014 are pharma, technology, aviation and telecom.

Implementation of government reforms around FDI in sectors like retail, telecom and financial services are likely to support deal making.

"The government's recent FDI policies and reforms around retail, aviation, broadcasting and telecom are good steps to enhance FDI inflows and is expected to increase deal activity," Grant Thornton India LLP Partner Transaction Advisory Services Raja Lahiri said.

Lahiri however noted that "there still remains an overhang of the overseas investor sentiment in implementation of the government policies which is possibly resulting in tentativeness in the minds of the investors at the current moment."