INDIA INC. M&AS 2011
M&As in 2011: Not a very happening year
Despite the threat of an ongoing economic crisis, M&A activity across global markets has has been quite robust during 2011. Even India Inc. doesn’t lag far behind. However, there are a few sectors which suffered due to lack of business confidence and hence, were off the radar of acquirers.
Issue Date - 01/01/2012
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As a sector, Oil & Gas dominated M&A activity with big deals like Reliance and British petroleum, Cairn and Vedanta. The telecom sector came second to Oil & Gas. However, the value of India-focused M&A deals just managed to total $39 billion in the first nine months of this year – a significant 31% decline compared to the same period last year. This was primarily a result of high interest rates, inflation, policy paralysis pertaining to foreign direct investment and poor returns from financial markets. However, with the expected rate cuts, the situation might improve in the near future and can help attract foreign companies to the country in turn accelerating M&A activity.
Due to a lack of policy reforms, telecom sector saw a huge retreat in M&As this year. Same was the case with metals and ores sector due to regulatory issues over mining. On the other hand, sectors like Oil & Gas, IT and ITES saw a big leap in terms of M&As. Ongoing carnage in financial markets also had a negative impact and hence. As a result the BFSI sector did not witness as much M&A activity as it did in 2010. However, the situation might improve in the next year as there seems to be a desperate effort from authorities to introduce a series of policy reforms in the telecom sector.