Total value of completed merger and acquisition (M&A) deals is expected to increase by 71 per cent to USD 30.3 billion during this year, driven by business friendly reforms, a report says.
According to a report by global law firm Baker & McKenzie, the ongoing business-friendly reforms are expected to support equity prices in the years ahead, driving higher deal-making activity.
“Our forecast shows the total value of completed M&A deals rising from USD 17.7 billion in 2014 to USD 30.3 billion in 2015 (71 per cent growth), before peaking at USD 48.1 billion in 2018,” the report said.
However, the deal activity is likely to slow from 2019 to 2020 following a pullback in equity prices.
Accordingly, number of completed M&A deals is expected to rise from 684 in 2014 to 880 in 2018, then dropping to 615 in 2020.
“The Modi government has reduced fuel subsidies and lifted caps on foreign investment in key sectors such as insurance, defense and railways. It has also lowered corporate taxes and encouraged private participation in the coal sector,” the report said.
A key driver of the rise in M&A transactions will be greater domestic M&A activity, which will grow to 51 per cent of India’s total M&A deal value in 2018, up from 34 per cent in 2014.