With banks beginning funding acquisitions, the domestic M&A market is poised for stronger activity, says Kamraj Singh Negi, managing director and CEO, investment banking, Pantomath Capital. He tells Kshipra Petkar that the IPO market is expected to remain strong, both in terms of volume and value.
How do you see the M&A landscape currently, and which sectors are attracting the maximum interest?
The bulk of the activity is on the capital markets side because the pool of capital is larger. Having said that, there is a lot of build-outs happening in M&As as well. Global buyout funds have had success with control transactions, encouraging more such deals. Domestic private equity players have become larger and are doing more control transactions. Financial services continue to see strong interest, while manufacturing and industrials are picking up. In defence, niche manufacturers want to expand capabilities either organically or through acquisitions. We are expecting a couple of conversations in that space.
How significant is allowing banks to fund acquisitions?
It is quite positive. It makes the access to capital easier. Banks are actively evaluating transactions, and you will see deals funded through a mix of equity and debt. Debt will mostly come from the Indian lending ecosystem, which was not the case earlier.
Are you seeing greater foreign interest in Indian financial services?
Yes. Investors from the US and Japan are showing a lot of interest. South Korea should also be mentioned. As of now, Europe has shown limited interest. The financial services sector is better understood compared to others. The regulatory clarity is higher. Investors understand what is happening, who is being lent to and what compliances are being followed. People are convinced about the credit opportunity; you just have to find platforms that can scale up.
How do you see the IPO market and capital raising evolving?
The IPO market will remain strong. Volume and value will be higher than last year. Manufacturing and industrials will continue to see good interest. There will also be more issuances across the power value chain, including capital goods. Financials, although delayed, will come back in a big way, probably starting with QIPs, followed by primary issuances.
Valuations in financial services are currently quite depressed. Private deals are happening at higher valuations, so a public issue may not provide proper value discovery. As market valuations stabilise, financial services will come back.