India rivals China for Asian M&A crown as financial services sector deals rise

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India’s mergers and acquisitions boom has seen it challenge China for the title of the M&A capital of emerging markets, particularly in the financial services sector, according to analysis by M&A and debt advisory specialists Livingstone.

International M&A firm, Livingstone which has bases in Beijing, Chicago, Düsseldorf, London, Los Angeles, Madrid and Stockholm conducted the survey, in association with the CASS Business School. And it found that in the first half of the year saw 109 M&A deals in which the target had a presence in India, just two fewer than in China.

India was also responsible for far the biggest deal of the period in Asia: Vodafone India’s US$10.25bn merger with Idea Cellular and business services saw the greatest number of deals in the period (44), boosted by strong interest in the financial services sector, with 12 deals done.

Activity in the country is driven by domestic companies but is also combined with particularly strong international interest, said Livingstone. In contrast to China, where well over half of buyers were from the mainland or Hong Kong, two thirds of deals in the first half in India were the result of overseas interest.

North American buyers, led by the US, were most active, accounting for more than half of inbound M&A – 40 deals in total (33 from the US and seven from Canada). Buyers also came from France, the UK, China, Singapore, Japan and a host of other nations.

“Despite the regulatory challenges that remain, India is a rising star for international buyers,” said Livingstone partner Jeremey Furniss. “M&A and international interest in the country is booming.”

Technology boom

Overall, business services saw the greatest number of deals in the period (44), boosted by strong interest in the financial services sector, with 12 deals, most of them with international buyers.

Technology was also strong, with a dozen deals each involving computer software firms and businesses focused on the internet and ecommerce – the majority, again, driven by international acquisitions. Strength in India contrasts with China, which has seen a big slow down in M&A in the last year. Despite strong growth continuing to surprise forecasters, Chinese government efforts to rebalance the country’s economy away from heavy industry have had impact an M&A in the country.

Nevertheless, Livingstone said, China continues to attract international buyers from both the US and Europe, and is also strong in technology: Between them, internet and ecommerce businesses and software firms accounted for more than a fifth of all M&A in China in the first six months, with half the deals involving international bidders.

Overseas buyers

“The expected slowdown in China is likely to benefit Indian businesses looking to sell, but the country will remain a key territory for acquisitive businesses looking for opportunities in the big emerging markets,” said Jeremey Furniss. “The region as a whole continues to offer exciting prospects for overseas buyers.”

The findings come from Livingstone’s report, ‘Global Acquirer Trends’, which tracked inbound deals across the UK and Ireland, the Americas, the Iberian Peninsula, DACH and the Nordic regions, which totalled 5,270 in the first half of 2017.

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Gary Robinson

Commercial Director, Head of Video at International Investment.

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