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Indian M&A activity at an All Time High in 2016
Dec 22, 2016

Merger and acquisition activity in India is on a high. The value of M&As that have taken place this year - at US$ 69.75 billion - are the highest on record for the country. This even beats the previous record of US$ 66.96 billion set in 2007.

In a year of otherwise sluggish economic activity, what does this trend indicate?

The slowdown in the economy had led to many corporates seeing stress on their balance sheets due to a reduced capacity to service debt. Thus many wanted to sell off assets in a bid to reduce debt. However, they've been wanting to do so for a few years know. So why this sudden pickup in activity in 2016? Yes, sellers of assets abounded. But just having sellers isn't enough for a transaction. You need buyers too. Thus perhaps this big bump up in buyer interest during 2016, which led to many big deals taking place, was an indication of increased confidence in the Indian economy.

That said, it does seem likely that the demonetisation move by the government and the resultant uncertainty will put on the speed breakers on M&A activity in the short term.

Data Source: Thomson Reuters, Livemint

This Chart Of The Day was published in The 5 Minute WrapUp - Budget 2017: Can Jaitley Pull a Manmohan?

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