M&As worth $28.6 billion in 2014; domestic inbound deals dominate

About 742 M&A deal amounting to $7 billion were seen in 2013, according to a joint study by Assocham and E&Y

Reflecting positive investor sentiment in the Indian economy, 870 mergers and acquisitions (M&A) worth $8.6 billion were announced in 2014 -- up 6 per cent over the preceding year, says a study.

About 742 M&A deal amounting to $7 billion were seen in 2013, according to a joint study by Assocham and E&Y.

"As many 870 mergers and acquisitions worth $8.6 billion were announced in 2014 with 93 per cent of the deals taking place in the form of domestic and inbound M&As, reflecting robust investor interest in the Indian economy," Assocham said in a statement.

It also said that outbound transactions had witnessed a "sharp drop during the last year" signifying "far less investor funds going abroad".

Releasing the joint study, Competition Commission of India (CCI) Member U C Nahta said that "in last one year, India has become one of the favourite destinations for investments all across the world.

"It is one fastest growing economies in the world with GDP touching almost 7.6 per cent, whereby returns on capital and the shareholder returns are on a higher side".

Domestic transactions accounted for USD 16.2 billion as compared to USD 6.2 billion in 2013.

There were 257 inbound deals valued at USD 10.4 billion, with maximum number of them from the United States (71 deals, USD 1.5 billion), followed by Japan (40 deals, USD 1.6 billion) and the UK (21 deals, $.6 billion).

"Deal activity began on a slow note, and picked up considerably in the second half of 2014 once the new government was elected and presented its pro-growth, investor- friendly budget," Assocham Secretary General D S Rawat said.

"New policy initiatives such as 'Make in India', new norms for FDI in key sectors such as defence, increased funding for the infrastructure sector and initial steps to establish a stable, predictable tax regime," he added.

Meanwhile, outbound investments were affected due to the relative investment potential, weak rupee and the reduction in large ticket overseas investment opportunities such as acquisition of oil bocks overseas.

In terms of deal value Pharmaceuticals, Technology and Retail & Consumer Products (RCP) were the most active sectors in 2014.

Health care and real estate were two other sectors wherein deal activity picked up during the year and that show promising signs for 2015 and beyond, Assocham said.

However, key growth sectors such as infrastructure, automotive and agriculture did not witness too much of deal activity and remain subdued throughout the year, it added.