By IANS
New Delhi : India will continue to witness a flurry of mergers and acquisitions, valued at $42.92 billion in the first four months of this year, against $35.62 billion for the whole of 2006, experts told a seminar Thursday.
In fact, India has emerged as the second most targeted nation for mergers and acquisitions (M&A) in the Asia-Pacific banking industry with deals worth $10.3 billion in 2007 so far, they told the seminar, organised by Dun and Bradstreet.
In a background note circulated at the seminar, the financial consultancy said while the current turbulence in the global financial market may slowdown M&A activity at the international level, but not in India.
“Domestic demand would keep the companies craving for growth. Private equity would be increasingly playing a much larger role in both funding and making mega M&A deals worldwide,” the consultancy said.
“India would continue to gain from M&As,” said Manoj Vaish, president and chief executive for Dun and Bradstreet, adding while India’s central bank had made it easier for such activity, the challenge was now in the hands of India Inc.
The background note said India saw a total of 480 M&As valued at $35.62 billion in 2006, against 343 such deals valued at $25.79 billion in the previous year. The cross-border M&A amounted to $15.31 billion, against $9.47 billion in 2006.
“Valuations will be a major area of concern for M&A deals. Due diligence is must to value companies. The target company is also looking for synergies to harvest value,” said Devinjit Singh, head of M&A Business Unit for Citigroup India.
A.K. Ravi Nedungadi, president and chief financial officer for the UB group, explained that valuation was one of the main reasons why one of their group firms Kingfisher Airlines, did not acquire rival carrier Air Sahara.
“Sahara had a very low brand image. They also had very large non-performing assets and high attrition rates. They were already bleeding. So we thought it will not harvest value for us,” said Nedungadi.
Giving some interesting figures and statistics, Dun and Bradstreet said Tata Steel’s $14.3 billion offer for Anglo-Dutch steel-maker Corus was the top M&A transaction in 2006 in Asia, while the $8.1 billion spin-off of the telecom business of Reliance Industries came next.