Mumbai: Riding on improved business sentiment, Indian companies have the highest appetite for mergers and acquisitions (M&A) among peers in Asia Pacific, according to the Bank of America Merrill Lynch 2015 CFO Outlook Asia survey. Sixty-nine per cent of Indian CFO’s said they will consider engaging in M&A activity in 2015, versus just 22 per cent last year and compared to the average of 37 per cent in the region. Indian firms’ M&A plans are mainly domestically focused, with 70 per cent of Indian CFO’s focusing on India and South Asia, while the most attractive overseas markets are Australia (33 per cent) and Western Europe (29 per cent).
Thirty-six per cent of CFO’s from India say they would look at major transformational deals, the highest in the region while a further 20 per cent said they expect to pursue large deals. “Quite clearly, over the last 12 months, business sentiment has improved and companies are shifting gears from battling a slowdown to preparing for a growth phase,” said Kavish Arora, MD and head of corporate banking at BoAML, India.
The top business goals of MNC’s in India also reflect aggressive expansion strategies. Investing to grow revenues is a priority for 89 per cent of CFO’s, the highest in the region followed by expansion into new markets at 73 per cent. Innovation in new business lines is also seen as a priority, cited by 68 per cent. Some 73 per cent say they will increase capital expenditure this year, substantially higher than the regional ratio of 58 per cent, and another indication of the optimism in the business environment.
“Domestic consolidation through M&A has picked up as Indian conglomerates make portfolio choices and look to scale up in their priority sectors. This is the first step in a typical M&A cycle which will be followed by increased interest in inbound acquisitions by multinational corporations, and finally, renewed focus on outbound deals by successful Indian firms,” said Raj Balakrishnan, MD and co-head of investment banking, India.
