More foreign firms coming in than Indian companies going out through M&As: ASSOCHAM

Visible improvement in business confidence led to 32 per cent increase in the value of mergers and acquisitions executed by foreign companies in India to USD 11.48 billion in 2014.

While the year witnessed a sharp drop in the domestic firms scouting for M&As abroad, finding better opportunities at home turf, an ASSOCHAM Research report noted.

The total value of inbound deals - wherein foreign companies or their subsidiaries acquired Indian businesses -- rose by 32 per cent in 2014, to USD 11.48 billion from USD 8.7 billion in the preceding year.

However, outbound deals, in 2014, dropped by 38 per cent to USD 5.7 billion (111 deals), on account of good opportunities available in India.

The total value of M&As as well as private equity deals involving Indian firms was up by about 26 per cent to USD 48 billion during this year.

Sectors such as IT and ITES, pharma and healthcare, banking and finance, telecom, retail/consumer and real estate sectors were leading in the M&A space whereas the E-commerce, IT &ITeS, banking, finance and Infrastructure sectors were major players in the private equity space.

"The liberalized policies including the liberalized M&A provisions under the Companies Act, 2013 (yet to be effective), would be paving the way for bright future of M & A in 2015,'' the ASSOCHAM report said.

"Liberalizing and hiking the FDI limit in sectors such as Insurance, Defence, real estate and infrastructure, coupled with changes in the land acquisition policy especially in PPP based infrastructure projects and coal auction would open further avenues for M&As during 2015,'' ASSOCHAM President, Mr Rana Kapoor said.

M&As and PE activity together, had added to 1,116 deals worth USD 48 billion involving Indian companies from January to December 10, 2014 as compared to USD 38 billion involving 949 deals in 2013.

In the private equity sphere, as many as 565 transactions valued at USD 11 billion were announced, this year till December 10, 2014, up 11 per cent compared to 2013.

Domestic M & As too surged during the year, powered by large transactions such as Kotak Mahindra Bank Ltd'sUSD 2.4 billion takeover of ING Vysya Bank Ltd and Sun Pharmaceutical Industries Ltd'sUSD 3.2 billion purchase of Ranbaxy Laboratories Ltd.

Recently on 23rd December, 2014, UltraTech Cement Ltd. agreed to buy two cement plants and related power assets of Jaiprakash Associates Ltd. in Madhya Pradesh for USD 870 million, giving the country's biggest cement maker.

Also, the opening of FDI in new sectors and enhancing limits in sectors such as Insurance, Defence, liberalized FDI policy for real estate and infrastructure, decisions to review land acquisition policy especially in PPP based infrastructure projects, coal auction etc are the measures being taken by the Government, which will definitely supplement the increase in M & A activities.

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