Domestic M&A deals to surpass $49 billion by 2019: Report

As per global law firm Baker McKenzie, the domestic mergers and acquisitions (M&As) stood at $17.5 billion in 2016 and is likely to touch $28.5 billion in 2017. “India is predicted to be one of the global hotspots for M&As in coming years, with the total value of M&A transactions (domestic and in-bound) more than doubling to $49.3 bn in 2019,” the report said. The estimates are based on easing of threats to the global economy going forward which will help deal-makers regain confidence in the domestic market. In number of deals, the same is expected to nearly double from 553 in 2016 to 916 in 2019. This year 786 transactions are likely to take place. 

While domestic deals in 2019 will be $22.6 billion of the total $49.3 billion, cross border and inbound deals will together account for $26.8 billion, it said  Ashok Lalwani of Baker McKenzie India, said that while there can be uncertainties related to the US policies under the new president Donald Trump, there are various opportunities for Indian firms to look at the US which is seeing recovery. 

He also noted that the US would want to expand its business globally. Interestingly, he also said India as well as other Asia-Pacific countries will be increasingly looking at investment opportunities within Asean regions to insulate themselves from other global uncertainties. “The RBI’s more accommodative monetary policy along with solid domestic demand should support M&A and IPO activity in the next two-three years,” Lalwani said. 

“We do expect overseas corporate buyer activity to pick up as well, as India continues to be a focus for emerging market investors globally. Consolidation, restructuring and asset sales by highly-leveraged companies are expected to continue and drive M&A activity here,” he added. Sectors that are directly linked to the consumption story-financials, consumer, healthcare, Internet and real estate-will see momentum on the M&A front. M&As will see some correction in 2020 where it is expected to fall to $38.8 bn from $49.3 bn in 2019. 

Besides, a strong pipeline of IPOs is also in place with public issues worth $4.76 billion in 2019 up from $4.04 billion in 2016. This year is likely to see IPOs worth $5.80 billion. The firm also released a survey of business leaders across the Asia-Pacific region, in which India comes as the most focused country on improving business environment, above China, Singapore and Australia. 

India is also expected to have the maximum economic influence in the region over the next five years with as much as 95 per cent of the survey respondents considering India as having a greater economic influence, while a third see India as having far greater influence. This compares with 76 per cent for China, and just 20 per cent for the US, while 42 per cent say the US will far less influence. And Gary Seib, Baker McKenzie Asia Pacific chair attributed this decline in the US influence due its recent proclivity to look highly inward-looking and protectionist under Trump, and Europe getting mired in elections and Brexit talks, leaving intra-Asia Pacific activity to lead international trade and investment.