Deal Street eyes busier new year after Rs 2 tn M&As in 2012
Inbound deals suffered a decline this year owing to moderation in the India growth rates, lack of government reforms and tax regulations (relating to GAAR and retrospective amendments) coupled with the global economic weaknesses. While 2011 witnessed M&A inbound deal value of USD 29 billion, so far this year it stood at USD 7 billion.
Interestingly, 2012 saw outbound deal value rise to USD 14 billion, from USD 10 billion worth deals in 2011, despite economic weaknesses.
This was largely on the back of large deals in the oil and gas space (ONGC's outbound investment in Kashagan oilfield ¿ USD 5 billion), Rain Commodities acquisition of Rutgers (USD 0.9 billion), Piramal's acquisition of Decision Resources Group (USD 0.7 billion) and GMR Energy's reverse merger with UFS, Singapore (USD 0.6 billion).
The rise in internal mergers and restructuring was largely driven by the Sterlite-Sesa Goa's USD 12 billion deal.
Grant Thornton's Harish said the rising debt levels of Indian corporates and concerns on debt servicing (especially in sectors like infrastructure, aviation, retail) have triggered Indian promoters to unlock cash by way of M&A of their non-core and sometimes core assets like the Pantaloon-Aditya Birla Group deal and United Spirits deal with Diageo.
The sectors likely to see more significant revival in M&M momentum in 2013 include retail, telecom, information technology and healthcare.
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