Appetite for M&A deals improving in India, globally: KPMG

Jan 29 2014, 19:23 IST
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The year 2013 was a The year 2013 was a "challenging year" for M&A activity in India. Reuters
SummaryThe year 2013 was a "challenging year" for M&A activity in India, KPMG.

World's largest corporates, including Indian firms are expected to show a greater appetite for M&A transactions in 2014 than they did last year, according to KPMG International latest Global M&A Predictor.

Besides increase in confidence, analysts are also expecting corporates to have more capacity to undertake transactions during 2014 than previously.

"Investors have been patient over the last three or four years; but as deal capacity continues to rise and global markets maintain some stability, the pressure on cash-rich corporates to start deal-making again is going to intensify," Tom Franks, Global Head of Corporate Finance at KPMG International and a partner with the UK firm said.

However, the US Federal Reserve's end of year tapering of quantitative easing could have a temporary dampening effect, but overall the combination of growing capacity and rising confidence suggests a potential rise in transaction levels in 2014, KPMG said.

With regard to M&A and private equity trends in India for 2014, Ashok Mittal, Head-Corporate Finance, KPMG in India said: "we are beginning to see more traction and interest in the last quarter and expect that 2014 will be a much better year.

"The Indian economy is showing signs of bottoming out in terms of growth and that, with increased stability in the global economy, will drive up M&A sentiment."

The year 2013 was a "challenging year" for M&A activity in India.

"A slowing domestic economy, high interest rate environment, lack of progress on much needed reforms and a volatile Indian rupee resulted in a depressed M&A sentiment, Mittal said.

Meanwhile, although the overall market sentiment is undoubtedly positive, transaction levels have still not caught up.

From 30,945 deals in January 2013, the total number of completed deals fell to 27,194 in December, a drop of over 12 per cent. Deal values also declined, falling around 7 per cent over the same period, KPMG said.

"Steadily increasing corporate confidence is still not being reflected in global transaction levels, and deal markets are continuing to struggle. However, this is against a background of a red hot IPO market in the UK and the US, and it will be interesting to see how the M&A situation changes during 2014," Franks added.

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