The contribution of cross border deals to this was a subject debated at the Third Global M&A Symposium. The event, hosted by the Alliance of Merger and Acquisition Advisors (AM&AA) and Primerus, looked at how India will contribute to the M&A market in the next 12 months.
Ramanand Mundkur, managing partner at Mundkur Law Partners in India, says that in the first quarter of 2011 India recorded its highest M&A figures for the last 16 quarters. With 90 per cent of deals completed in 2010 being cross border purchases, Mundkur explains that the worldwide ‘doom and gloom’ is working to India’s advantage.
He adds: ‘Valuations are now getting more aggressive. There is a move towards quality which, in a growing market, is quite rare.
‘Today there is a growing number of young people in India who want to be entrepreneurs. They are people who have ideas and are looking at innovation as driving their success.’
Research conducted by Mergermarket finds that during 2010, 95 outbound deals totalling $24.6 billion were completed. Additionally 123 inbound deals totalling $24.3 billion were recorded representing 43.6 per cent of all deals with an Indian target.
Mundkur says that the bulk of liquidity is in the middle market and lists the top five industries: telecoms, energy and mining, industrial and chemical, pharmaceuticals and financial services.
India’s GDP grew at 8.6 per cent in 2010, and Mundkur points to the one billion middle classes who could potentially push growth further.
One concern that Mundkur does have is with finance. He explains: ‘There is not enough good quality credit; India needs to open up the banking sector to foreign ownership more.’
However, Mundkur is optimistic about India rising to the front of the M&A market. ‘It’s a question of when not whether,’ he notes.
He outlines the biggest risk to continued growth as corruption, but sees the perceived level of corruption as higher than it actually is.
Mundkur comments: ‘The bulk of politicians are looking for solutions. On balance I think going forward there will be political risk but all the other fundamentals point towards growth.’