At $28 billion in 2013, M&A activity lowest in 3 years

MUMBAI: For investment bankers, the year 2013 will be nothing to write home about. Even though there have been some spectacular deals, such as Unilever’s open offer for its Indian arm and ONGC’s investment in Mozambique’s energy assets, the overall M&A activity has been muted.

Deal activity declined to its lowest in three years to $28 billion in 2013, latest industry data showed. What brought some cheer for bankers have been inbound deals that accounted for more than half of the pie. MNCs’ growing appetite for India’s long-term consumer story saw many of them raise their stakes in local units even as they battle slow growth in their home countries . Indian M&A may account for a small percentage of the activity worldwide but the country sits among the top five destinations for M&A transactions.

“Themes that drove inbound M&A this year include continued interest in the Indian consumer and healthcare sectors, stake enhancement by multinationals in their listed subsidiaries and rebound of large investments by private equity firms,” said Ravi Kapoor, head-corporate and investment banking, Citi India . Bankers are hoping M&A activity picks up in 2014 even as the country may see a new government take charge.

“The M&A business has been difficult in 2013 and the prime reasons for this are the decline in India’s macro-economic fundamentals and negative news flow including corruption ,” said T N Giridhar, MD& CEO of Lincoln International , adding that “these have resulted in a negative outlook towards India” . “For 2014, M&A activity is expected to be very selective both by Indian companies and global companies looking to enter India,” Giridhar said.