'M&A gaining momentum as growth picks up'

With the shadows of financial crisis receding, India-related mergers and acquisitions are likely to gain momentum in the months ahead, top investment bankers said today.

"We are likely to see more cross-border mergers and acquisitions in the coming days, thanks to the sufficient liquidity and bullish stock markets," DSP Merrill Lynch's MD (mergers and acquisitions) Raj Balakrishnan said at a seminar here.

Compared to the last year, when mergers and acquisition (M&A) activities significantly slowed down on account of the impact of global financial turmoil, cross-border take overs are poised to gather momentum in the foreseeable future, Balakrishnan said.

According to a recent study, M&A activity in the country more than doubled in the first month of 2010 as deals worth nearly $ three billion (about Rs 13,950 crore) were announced amid improved signs of liquidity.

In January this year, there were as many as 29 domestic deals worth $2,303 million compared to 14 transactions worth $589 million in January 2009.

Telecom, logistics and banking, and finance and insurance were the most targeted sectors for investments with deals worth $2,180 million, $164 million and $117 million respectively, according to the study conducted by financial research services provider VCEdge.

"There are several indications that mergers and acquisitions will continue to improve and we will see more deals happening this year compared to the last year," Balakrishnan further said.

He also underscored the importance of M&A activities in a vibrant economy as it would help to propel the growth and support the India growth story.

Deutsche Bank India's MD (merger and acquisitions) Amrit Singh also supported this view but pointed out the need for enhancing clarity in the regulations pertaining to take overs.

"There is a need for clarity on regulations (related to mergers and acquisitions) so that corporates will be much certain (about the fate of transactions)," Singh said.