Mukesh Ambani’s ambitious courtship of international investors has helped India turn to a rare bright spot for deal-making in 2020. India accounts for quite 12% of proclaimed M&A in the Asia Pacific region to date this year, the best ratio ever since 1998. As per the data drawn by Bloomberg, the country’s tally has raised 18% from a year ago to $55.3 billion, defying an 18% slide for the region.
India is currently witnessing advancement in the digital sector everything from e-commerce and content streaming to messaging and digital payments with a growing half a billion internet users. The sector’s importance has only increased with the COVID 19 pandemic which shoved India to impose complete lockdown in late March.
Kerwin Clayton, co-head of M&A for the Asia Pacific at JPMorgan Chase & Co. Said, “India has become one of the busiest markets for M&A in Asia.” Also, Global companies and investment funds are considering more options to enter India, in a similar way to what happened with China a decade or so ago.
Jio platforms, the fourth largest Indian company by market capitalization, is front and center in the surge of activity. The association with the computer chip giant, Intel Corp, has propelled Jio’s valuation to $65 billion. Aalok Shah, managing director at Rothschild & Co, said “There was significant deal activity in the tech space already but nothing of the speed and quantum we witnessed in Jio Platforms.”
Also, a positive word with the health care and infrastructure sector is that it is more likely to see a rise in investment.
The pandemic had significantly affected the financial sector of the country. Indian companies including banks are more likely to raise funds in the markets to cushion the crisis. Also, the sectors such as industrials and travel have borne the worst of the COVID 19.
Impact of India – China disengagement
According to Bloomberg, M&A activity in India by Chinese companies is lower in 2020 than in recent years. The Chinese companies guaranteed to invest only about $579 million during the first half of 2020 in Indian companies which was about $1.5 billion for the same period in 2019. The bankers are also expecting a further slowdown of Chinese investments for the rest of the year.
Meanwhile, global investors are driving
transactions with India. KKR & Co. acquired a controlling stake in J.B.
Chemicals and Pharmaceuticals Ltd, Carlyle Group is planning to purchase a 20%
stake in Ajay Piramal’s pharmaceutical business and recently Facebook
made
a $5.7 billion investment in Jio.
