Merger and acquisition (M&A) activities India are expected to slow down in FY09 owing to lack of financing due to liquidity crunch and poor conditions of primary markets. In addition, the challenge faced by industry in leveraged buyouts (LBOs), given stringent measures taken by the Reserve Bank of India (RBI) in the past few months, has become equally grave. The RBI hiked the Repo rate and Cash reserve Ratio (CRR) recently which led to an increase in prime lending rates by various banks. This has impacted mergers and acquisitions, felt experts gathered at a merger and acquisition event organized by Dun & Bradstreet.

Indian M&A activity totaled $ 19.80 billion in FY08 as compared to $ 33.1 billion in FY07. The decline of M&A activity was in line with the global activity. The average size of deals in FY08 was $ 23.4 million, far lower than the $ 70.5 million level seen in FY07. Cross border M&A totaled $ 8.2 billion in FY08 after declining of 56.3% from the previous year, where the total cross border M&A was $ 18.7 billion. Kiran Vaidya, president, Group M&A, Religare Capital Markets Ltd said, ?Cross border M&As have become a fundamental characteristic of the global business landscape. 5 months ending May 2008 saw 15,698 deals at a value of $ 1421.3billion.? This is in marked contrast to the 19,784 deals recorded in H2 2007 worth $ 2161.3 billion. Private Equity (PE) firms were a major driver in the world of M&A during 2007 with accounting for $ 872.4 billion in announced deals; it constitutes 19.5% of the overall annual volume and a 9% increase over 2006. PE financing slowed down in H1 2008 due to contraction in the credit markets caused by the sub-prime crisis, he added.

Speaking on the regulatory perspective of M&A, T C Nair, whole-time member, (Sebi) said, ?Regulations aim at transparent deals and protecting interests of all shareholders. Sebi?s take-over code provides for transparent, economical and fast take-over of listed companies apart from protecting interests of all shareholders. We are looking at revamping take-over regulations for M&As in the near future.?