India's M&A Market Set to Boom Over Next Three Years; Indian Influence in Asia Pacific Predicted to Grow
Baker McKenzie unveils latest India research
- Domestic and inbound M&A activities set to peak in 2019 after picking up in 2017/18
- The flurry of domestic IPO activity in India is likely to continue in 2017 and beyond
- Business leaders across Asia Pacific see India as the country most focused on improving business environment, and its influence growing significantly in the region
India is predicted to be one of the global hotspots for M&A in coming years, with the total value of M&A transactions in India (domestic and inbound) more than doubling to US$49.3 billion in 2019, according to a new research report from global law firm, Baker McKenzie.
Their Global Transactions Forecast, in association with Oxford Economics, predicts this M&A uptick, as well as a strong pipeline of IPOs, over the next four years. According to the research, as threats to the stability of the global economy ease and dealmakers regain confidence in the market, apprehension is predicted turn into appetite.
Ashok Lalwani, Global Head of Baker McKenzie's India Practice, said the Reserve Bank of India's more accommodative monetary policy along with solid domestic demand should support M&A and IPO activity in the next two to three years.
"We do expect overseas corporate buyer activity to pick up as well, as India continues to be a focus for emerging market investors globally. Consolidation, restructuring and asset sales by highly-leveraged companies are expected to continue and drive M&A activity in India. Sectors that are directly linked to the consumption story—financials, consumer, healthcare, Internet and real estate—will likely see good momentum on the M&A front," he further added.
Source: Oxford Economics and Baker McKenzie
Complementing this economic forecasting was a survey of business leaders across the Asia Pacific region. The survey had some good news for those India policymakers, corporates and financial institutions seeking an increase in Indian deal making.
The survey found India was viewed as the country most focused on improving its business environment in the region, more so than countries such as China, Singapore or Australia.
When asked how much economic influence India was expected to have in the next five years across the Asia Pacific region, a full 95% of senior executives see India as having a greater economic influence, including a third who see India as having far greater influence.
This compares with 76% of respondents that said China would have more influence in the region, and just 20% who said the US would have more influence, compared with 42% of survey respondents who thought the US would have less or far less influence.
Compared with today, how much economic influence do you expect India will have in the Asia Pacific region in five years' time?
Source: Mergermarket and Baker McKenzie
Gary Seib, Chair, Asia Pacific, Baker McKenzie, said: "As the US potentially becomes more inward looking and protectionist, and Europe deals with elections and Brexit negotiations, an increasing share of the growth in international trade and investment will by necessity come from intra-Asia Pacific activity. Not only are business leaders looking more favourably on India as a destination to do business in and with, there is an expectation that India’s influence will grow substantially in the region as a result.
"Business leaders are expecting more confident, outward looking Indian corporates to be looking for new opportunities. While our research focuses on the Asia Pacific region, it is Baker McKenzie’s view that this expectation is true globally; for example, both Theresa May in the UK and the new Trump administration in the US have made public overtures for Indian trade and investment."