India beats China, attracts larger chunk of M&A deals from US
Reshmi Khurana, MD & head of South Asia, Kroll

Owing to favourable economic and demographic conditions, along with an encouraging regulatory regime, India has attracted 6% of all outbound M&A transactions from the US in terms of deal volume in 2015, surpassing 2% of outbound M&As directed at China that year, according to a report by risk solutions provider Kroll. 

The report said conditions favourable for investors are transforming India into an ideal target market for inbound M&As in Asia-Pacific. Since 2011, inbound transactions have trended up, and overall foreign direct investment (FDI) in the country reached a peak in 2015 that placed India as one of the leading destinations for global FDI, ahead of regional economic rival China, it said.

In 2016, India has so far continued to attract US interest, with $3.1 billion through 27 deals compared to similar US investment in China at $1.3 billion across 13 deals.

Politically, the country is more stable than in previous investment cycles, with the BJP led government initiating a number of economic reforms that are instilling economic confidence and raising India’s attractiveness as a destination for FDI, said the report. 

General sentiment among foreign investors for Indian investment opportunities remains strong, creating a bright outlook for inbound M&As through the rest of this year and into 2017, said Reshmi Khurana, managing director and head of South Asia, Kroll. 

In 2015, inbound M&As of $19.6 billion across 227 deals were closed, while 82 deals worth close to $9 billion were announced in the first half of 2016, putting the country on track for another banner year of inbound investment.

Among the transactions, technology, media and telecommunications companies accounted for 26% of deal value and 22% of deal volume since 2011, led by sunrise sectors including e-commerce, which has churned several unicorns out of India.

Other prominent sectors for inbound M&As include the consumer space which saw substantial activity – 14% of deal value and 10% of deal volume – led by demographic factors such as the emergence of an increasingly young and working population and rapid urbanisation, said the report.

Closely behind these sectors is industrial and manufacturing that has contributed 9% of deal value and 22% of deal volume since 2011, on the back of the government's ‘Make in India' campaign to attract further overseas investment.

Kroll provides risk management services about people, assets and operations that investors use to mitigate investment risk. The New York-based company has more than 50 offices across nearly 30 countries. It has over 2,000 employees catering to law firms, financial institutions, corporations, non-profit institutions, government agencies and individuals.

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