Kolkata, 11 September
With a significant slowdown in global mergers and acquisitions, India saw a considerable decline in such activities.
A KPMG International report reveals that ongoing fragility of global M&A transactions had an inevitable impact on deals involving high growth markets (HGMs).
Only 18 deals involving high growth market acquisitions of targets in developed markets were completed in the first half of 2013, in comparison to 33 deals in the second half of 2012.
On the other hand, developed market acquisitions of targets in high growth markets showed a marginal increase with 45 deals completed ~ with one more than in the first half of 2012. The volume of deals involving both high growth market acquirers and high growth market targets transactions also saw a significant decline, according to the study.
KPMG International’s latest High Growth Markets International Acquisition Tracker shows that M&A transactions involving high growth markets (HGMs) are not immune to the pressures that continue to hinder overall global M&A activity. Although there have been suggestions that market confidence and optimism are returning to the deals market, the latest high growth market transaction figures do not bear this out.
Developed market acquisitions of targets in high growth markets were at their lowest level since at least 2009. Such deals in H1 2013 were 23 per cent down on compared to the previous period last year and 13 per cent down on H2 2012. This is the largest six-month decline since 2008/2009, when deal volumes plummeted by 32 per cent in six months.
Mr Tom Franks, KPMG’s global head of corporate finance, says: "The last six months have clearly been weak for high growth market deals, but it is part of a global downward trend in M&A activity, rather than a specifically high growth issue. That said, some key high growth markets appear to have been particularly affected. The data suggests that China may be losing its lustre."
Says, Mr Utkarsh Palnitkar, head-transactions & restructuring, KPMG in India: "Slow progress of economic reforms combined with increasing inflation rates and depreciation of Indian currency against the US dollar have had an impact on the M&A activity in India. While we saw the year beginning on a slow note, the second quarter of 2013 did see resurgence in the M&A activity on the back of some notable cross-border deals such as Apollo Tyres-Cooper Tire, Mahindra-CIE along with Unilever’s stake increase in Hindustan Unilever and the Jet-Etihad deal which is currently underway. While the outlook for 2013 still remains uncertain, we believe that the uptick in M&A activity as witnessed between April to June 2013 may drive a return of confidence in boardrooms as well as help in improving global investor sentiment."