The Economic Times

India turning into a hotspot for capital

23 December 2007

Mumbai: India Inc attracted deals worth $68.32 billion for the year 2007, significantly higher than $28.16 billion in 2006 and $18.35 billion in 2005.

The jump underlines India as a hot destination for merger and acquisitions (M&A), and also for private equity (PE) investment. Of the total of $68.32 billion deals, M&A accounted for $51.17 billion while the remaining $17.14 billion was in the form of private equity investment.

As per a Grant Thornton report there were 661 M&A deals, including 348 cross-border deals and 313 domestic deals. Among cross-border transactions, 240 were outbound ones, where Indian companies made overseas acquisitions. Such deals amounted to $32.73 billion.

Tata Steel’s acquisition of Corus for $12.2 billion was the largest among outbound deals, followed by Hindalco-Novelis, and Suzlon Energy-RE Power with transaction value of $ 6 billion and $1.7 billion respectively.

There were 108 inbound M&A deals amounting to $15.61 billion, where global companies or their subsidiaries acquired Indian businesses. Vodafone tops the list of such kind of deals with transaction value of $10.8 billion. The global telecom giant has acquired a majority stake of 67% in India’s one of the leading telecom players, Hutchison Essar.

An industry-wise analysis showed that steel and telecom sector clearly dominated the M&A scene as both the sectors saw deals amounting to $14.9 billion and $11.3 billion respectively in '07.

Aluminium, power and energy sectors also contributed substantially to the heightened M&A activity in the country. The trend shows a diversion of M&A activity to core sectors from IT, pharma, healthcare and biotech which had seen high value M&A deals last year.

******