India 2nd in M&A hotspots

M&As in the first half of '05 were up 80% against global average of 5%.

Next to Japan, India has had the highest growth rate in merger and acquisition activities across the globe.

The total number of mergers and acquisitions (M&A) deals in the first half of 2005 were up 80 per cent compared with the global average of 5.40 per cent and the Asia-Pacific (ex-Japan) average of 6.57 per cent.

According to M&A data available from Bloomberg, Japan topped the table with a higher growth in deal count at 84.7 per cent.

According to investment bankers, the rise in M&As is significantly explained by the surge in cross-border activity both by Indian companies expanding abroad and MNCs looking at India.

Besides, "increasing integration with the global economy and renewed business confidence with ample availability of funding are facilitating companies to look beyond consolidation within India," said Amit R Chandra, joint managing director, DSP Merrill Lynch.

According to V Jayasankar, executive director, Kotak Mahindra Capital Company, "M&A activity has gained momentum across sectors particularly in manufacturing. This has helped Indian companies position themselves in the global arena."

The total number of deals in India for the first half of 2005 was 189 compared with 105 during the same period last year. Asia-Pacific as a whole witnessed a total of 2448 deals, compared with 2297 deals last year. China saw the largest number of deals (686) but the growth figures were lower than India's at 18.69.

Hong Kong struck about 290 deals compared with 274 in the same period last year. The data are based on publicly-disclosed transactions that are either pending or completed. M&A activity includes all mergers, acquisitions, divestitures, self-tenders, spin-offs, private equity swaps and privatisation.

In terms of volumes, however, India lagged behind the global average but was better off than the rest of Asia. M&A volumes were up 34.23 per cent from last year at $5974 million. Global M&A volumes grew 37.57 per cent though volumes in Asia-Pacific were down 3.66 per cent.

China was the biggest drag with the volume of deals slumping 46 per cent from $32,047 million in the first half of the last financial year to $17,290 in the same period in the previous year.

South Korea saw a total 130 deals worth $11,957 million. Taiwan had 112 deals with volumes of $4804 million. For India, "the second half of the financial year should be even more robust," says Jayasankar.