Foreign firms acquiring in India rise, fall in reverse flow

Improved business confidence in India has led to a 32 percent increase in value of mergers and acquisitions by foreign companies and a sharp drop in the reverse flow from the country, industry chamber Assocham said Thursday.

"Visible improvement in business confidence led to 32 percent increase in the value of mergers and acquisitions executed by foreign companies in India to $11.48 billion in 2014 from $8.7 billion in the preceding year, while the year witnessed a sharp drop in domestic firms scouting for M&As abroad, finding better opportunities at home turf," it said in a release here.

"However, outbound deals, in 2014, dropped by 38 percent to $5.7 billion (111 deals), on account of good opportunities available in India," Assocham added.

The total value of M&As as well as private equity deals involving Indian firms was up by about 26 percent to $48 billion during this year.

"The liberalized policies, including the liberalized M&A provisions under the Companies Act, 2013 (yet to be effective), would be paving the way for bright future of M&A in 2015," the chamber said.

In the private equity sphere, as many as 565 transactions valued at $11 billion were announced this year till Dec 10, 2014, up 11 percent compared to 2013.

Domestic M&As also surged during the year, powered by big transactions such as Kotak Mahindra Bank's $2.4 billion takeover of ING Vysya Bank and Sun Pharmaceutical's $3.2 billion purchase of Ranbaxy'Laboratories.

In a report released Wednesday, Assocham said there has been a sharp decline of about 20 percent in the total amount of proposed industrial investments received by states across India in various sectors.

The Associated Chambers of Commerce and Industry of India data showed the country had received 1,421 investment proposals worth Rs.362,805 crore till September 2014 which had declined significantly from 1,906 proposals worth Rs.451,643 crore.

Country-wise, Mauritius, Singapore, Britain, Japan, the Netherlands, the US, Cyprus, Germany, France and Switzerland are among the top investing countries in India.

"Considering the growing competition between emerging economies for foreign investments, FDI is highly imperative for India considering that it has completely transformed the quality, productivity and production in sectors it has been allowed and can supplement domestic efforts significantly," said D.S. Rawat, national secretary general of Assocham while releasing the findings of the chamber's analysis.