Indian CFOs most bullish in Asia-Pacific about M&A

CFO survey of 2015 revealed that 69% of Indian CFOs said that they will look at exploring M&A activity this year

Indian chief financial officers (CFOs) are an optimistic bunch. They are not only confident about the economic environment improving but have also showed the highest appetite for mergers and acquisitions (M&As) among peers in the Asia-Pacific, according to a survey by Bank of America Merrill Lynch.

The survey of 2015 revealed  69 per cent of Indian CFOs said they will look at exploring M&A activity this year compared with just 22 per cent last year. The interest in M&A to expand the scope of business is also highest in the entire Asia-Pacific region, with the average at 37 per cent. However, currently the focus is on domestic M&As and not on outbound ones.

Kavish Arora, managing director & head of banking at Bank of America Merrill Lynch India said the companies are now hopeful of a revival in the economic cycle.

“With the government focusing on infrastructure spending and resolving to push through policy reforms, companies are hopeful that the investment cycle will revive. With easing inflation levels, lending rates would consequently likely soften and provide a further impetus to corporate profitability and recovery.”

Apart from focusing on M&As, CFOs are also looking at expanding their business. According to the survey, 89 per cent of the Indian CFOs said investing to grow revenues is a key priority.

Another 73% are also looking at expanding into new markets. In order to expand the business, companies are also looking increasing their capital expenditure plans. About 73% of Indian CFOs said that they will increase their capital expenditure this year.

The report also pointed out that despite Reserve Bank of India nudging corporate to be hedged in order to seek protection from rupee volatility, there are several companies that are under-hedged. Out of the Indian CFOs surveyed, two-third of them said that they have a significant exposure to the US dollar but only 53% said they are hedged against currency volatility.

This survey included the view of 630 respondents across Asia Pacific region out of which 75 were from India. The Indian CFOs were from companies with revenues of over $1 billion.