India Inc to continue with its shopping spree in new year

NEW DELHI: India's deal street is likely to witness increased momentum in the new year as a large majority of corporate houses believe merger and acquisition (M&A) activity would see a dramatic uptrend driven by easy liquidity and attractive valuations, a survey said.

According to the Grant Thornton India - Third Mergers & Acquisitions (M&As) and Private Equity ( PE) survey 85 per cent of the survey respondents have a positive outlook on strategic M&A in 2011.

Grant Thornton's Partner Corporate Advisory and National Leader Valuations C G Srividya said, Indian companies have started to look at M&As as one of their key growth strategies.

"This outlook is backed by increased confidence levels, stronger fundamentals including significant improvement in business and financial performance, enhanced availability of finance and several attractive opportunities in the global markets," she added.

Private equity is seen as catalysts of change and a whopping 79 per cent respondents believe that PE investments would increase dramatically in the coming year.

Telecom is expected to be the largest contributor to domestic M&A deals, while, pharma, healthcare and biotech sector would drive the cross border M&A transactions, the report said.

"It is very clear from our survey and, of course, recent trends in the market that sentiments towards M&A have changed for the positive. It is clear that M&A is a key element of corporate strategy and here to stay," Grant Thornton India Partner, India Leadership Team Harish HV said.

The survey noted the maximum outbound acquisitions would be done in Europe and the largest proportion of inbound acquisitions would be from North America.

According Grant Thornton, in the first 11 months of this year the total M&A value was USD 45 billion, while the aggregated PE deal value till November this year amounted to USD 5.27 billion.

Besides, there have been nine M&A deals valued at over a billion dollar each in 2010 in the first 11 months, setting positive trends.