The Merger & Acquisition (M&A) activity in India remained subdued in the first half of 2013, despite suggestions that market confidence was returning to the deals market, according to KPMG International’s latest High Growth Markets (HGM) acquisition tracker.
“Last six months have clearly been weak for high growth market deals, but it is part of a global downward trend in M&A activity, rather than a specifically high growth issue,” said Tom Franks, Global Head, Corporate Finance, KPMG.
Although 2013 began on a slow note, the second quarter witnessed resurgence in the M&A activity on the back of some notable cross-border deals such as Apollo Tyres -- Cooper Tire, Mahindra-CIE along with Unilever’s stake increase in Hindustan Unilever and the Jet-Etihad deal, which is currently underway.
According to KPMG, India saw 18 such deals, where companies from high growth markets acquired targets in developed economies that got completed in the first half of 2013, as against 33 deals in second half of 2012.
On the other hand, there were 45 deals in which developed market companies acquired targets in high growth markets -- one more than the second half of 2012.
“Slow progress of economic reforms combined with increasing inflation rates and depreciation of Indian currency against the US dollar have had an impact on the M&A activity in India,” Utkarsh Palnitkar, Head-Transactions and Restructuring, KPMG India.
Meanwhile, the volume of deals involving both high growth market acquirers and targets witnessed significant slump. “While the outlook for 2013 still remains uncertain, we believe that the uptick in M&A activity as witnessed between April and June, 2013 may drive a return of confidence in boardrooms,” he added.