M&A spree to continue in second half: PwC

PRIVATE EQUITY WATCH

Having sealed deals worth $55 billion in the first six months of this year, India Inc will maintain its merger and acquisition (M&A) spree with cross-border takeovers dominating the space, global consultancy firm PwC said in a report.

"M&A activity is expected to remain on an uptrend in the second half of 2007 and the dominance of cross-border deals is expected to continue," PricewaterhouseCoopers said in its report on M&A update for the first half of 2007.

The first half of the current year witnessed heightened deal activity with the value of M&A transactions crossing $55 billion with over 550 deals, far exceeding the total deal value recorded for all of 2006.

The report highlighted that the most notable deals during the period highlighted the sharp acceleration in outbound activity by Indian corporates and significant growth in private equity investments in the country.

Two major deals "" Tata Steel's $13.6 billion acquisition of Anglo-dutch major Corus and Aditya Birla Group flagship Hindalco's six billion dollar acquisition of Novelis "" brought India to the global forefront.

PwC said foreign direct investment is likely to get a boost with consistently strong economic growth, combined with continuation of the reform process and improvements in infrastructure by the Indian government, but significant policy changes appear unlikely.

Segments where the FDI cap could be relaxed include petroleum refining (from 26 per cent to 49 per cent) and civil aviation areas such as ground handling, maintenance and repair and air charter services, where up to 100 per cent foreign investment is expected to be permitted, as against 49 per cent at present.