2018 may see USD 50 bn M&As thanks to stressed assets changing hands: ASSOCHAM Outlook

In the backdrop of plenty of stressed corporate assets on offer at tempting valuations, India is expected to see mergers and acquisitions (M&A) worth USD 50 billion in 2018, according to an ASSOCHAM Year Ahead Outlook (AYAO).

The context for the forecast in 2018 was picked by ASSOCHAM Year Ahead Outlook from the trends in the calendar of 2017 when India's M&A transactions witnessed a quantum jump of 170 per cent in valuations and over 70 per cent in the number of transactions.

According to different data compilations, there were a total of 944 transactions (664 Domestic and 280 Cross Border) in 2017 worth USD 46.5 billion (US$13.1 billion Domestic and US$ 33.4 billion Cross Border). This was against a total of 553 transactions (358 Domestic and 195 Cross Border) worth US$ 17.5 billion (US$7.2 billion Domestic and US$ 10.3billion Cross Border) in 2016. There has been a quantum leap in M&A transactions in India with more focus on sectors such as healthcare, telecom, energy, real estate, media & entertainment, banking, insurance, oil, cement and consumer products, adds the ASSOCHAM paper.

The M&A opportunities in 2018 would remain robust given the fact that lot more assets continue to remain under stress, highlighted the study. Besides, several of the big ticket projects, referred to the NCLT under the Insolvency and Bankruptcy Code would see change in promoters in areas like real estate, steel etc, said ASSOCHAM Secretary General Mr D S Rawat.

The chamber suggested easing of guidelines and legislative support in the Income Tax Act and the Competition Act. Amendments in the Stamp Act, 1899 to bring uniformity of Stamp Duty in all Indian states particularly to M&A transactions can prove to be a catapult for the future M&A's in India.

Since dawn of year 2017, India Inc has experienced several economic and structural reforms led by the government of India, particularly in respect of M&A that chiefly included the amendments in Section 234 of the Companies Act 2013 to permit cross border (inbound and outbound) mergers, introduction of NCLT as well as the transfer of jurisdiction for M&A approval from High Courts to National Company Law Tribunal (NCLT), Insolvency and Bankruptcy Code and GST that have brought paradigm changes to overhaul the existing framework for M&A transactions.

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