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Merger and acquisition (M&A) deals in India spurted to $55 billion in January-June 2014 from $40.5 billion in the corresponding period a year ago, according to Bloomberg data.
M&A deals had sunk to a four-year low of $62 billion in 2013, as policy paralysis slowed the economy down.
"Last year, the first half was one of the toughest periods, so the recovery is remarkable," said Raj Balakrishnan, managing director and head of investment banking at Bank of America Merrill Lynch.
The pick-up is due to consolidation and inbound acquisitions such as Sun Pharmaceuticals' $4 billion purchase of Ranbaxy Laboratories and Diageo's $3.2 billion purchase of United Spirits.
With a new government at the Centre, sentiments have started improving. Valuations of listed companies have seen a jump in the last month. There has also been a surge in qualified institutional placements in the market and there is hope of a revival in initial public offerings.
"It is going to be a blip for M&A growth in the next half if the capital market remains buoyant and the IPO market opens up," said Amitabh Malthotra, managing director at global investment bank Rothschild. Sellers will then have more options to raise money and can wait for valuations to stabilise. "As the capital markets recover, the perception of distress will change and difficulties will look less pronounced," said Chetas Desai, CEO at Indian investment bank Ambit Corporate Finance. "This will help valuations for companies to stabilise and then, one can expect real aggression for M&As next year," he added. The recovery in Indian M&As comes as global deals have climbed to a seven-year high.
