Indian M&A deals may see increased momentum post polls

Mergers and acquisitions (M&As) involving domestic companies are expected to increase if a stable government comes into power. According to experts, overall deal values in India could exceed $ 30 billion this year if Lok Sabha polls result in a stable government.

According to news agency PTI, post elections, the pace is expected to be greater for inbound deals, which have been largely pushed back for many months now for want of better clarity on the policy stance of new government.

The deal street in India remained moderate during the first two months of the year with only 170 deals worth $ 4.2 billion as cross- border activity remained tepid, as per Grant Thornton data. There is a strong sense in the market that the situation would improve post general elections provided the new government's economic policies encourage FDI and make doing business in India easier.

Sanjeev Krishnan, leader, PE and transaction services, PwC India, said that if there is a stable government (Bharatiya Janata Party or any other), economic reforms would be back on the government's agenda. " Then India would be looked at much more positively by both strategic and PE investors. In terms of numbers, at the minimum, I expect overall deal values in India to exceed $ 30 billion this year. However, if a weak or significant coalition dependence emerges, the numbers could be much lower." Girish Vanvari, co- head, Tax, KPMG India, said, "Election outcome can be a game changer. If a stable government emerges at the Centre and the new government takes steps to demonstrate stability of tax and regulatory regime in the country, it would restore the much- needed investor confidence." Vanvari added that post elections, " we could also see the number doubling from year on.

Take an example of the recently announced Sun Pharma- Ranbaxy deal, upwards of $4 billion in one deal itself. And, if there are four to five deals like this, imagine where the numbers can be". The increasing political uncertainty over the past one year along with a fear of a fractured mandate and policy paralysis perception have resulted in creating a cautious approach among strategic players, experts believe.

Courtesy: Mail Today