India Inc's merger and acquisition activity witnessed nearly 1,500 deals worth $62.5 billion in 2016 and with more economic reforms expected, the current year is also likely to be 'action-packed', says a report. According to assurance, tax and advisory firm Grant Thornton, M&A values clocked their highest, in the last five years with transaction worth $48.5 billion through 516 M&A deals.
In contrast, PE activity slumped this year and registered its first decline in the last four years over increasing caution in investor sentiments. There were 971 pure play PE deals worth $13.9 billion in 2016. "2016 has been extremely action-packed with tremendous growth in deal activity and a slew of economic and structural reforms," Harish HV, Partner at Grant Thornton India LLP said. He further said increasing confidence in Indian economy, FDI reforms and a vibrant primary market have motivated the increase in mega-deal volumes.
Going forward, the coming year will be a "year of reckoning" for the country where implementation of structural policies and reforms like GST, hike in income due to seventh pay commission and one rank one pension will drive growth.
Moreover, expected improvements in the banking sector, boost in private investments, pick up in rural demand, a robust primary market and improving utilisations across industries are likely to drive domestic growth. The report noted that amidst global uncertainties arising due to the Brexit and US presidential elections, India continues to be the bright spot and this is likely to drive resilient growth in deal activity in 2017 as well. Some key concerns for India this year are challenges facing the banking sector, subdued private investment, rising crude oil prices and the uncertainty in the global markets.
However, growth in domestic consumption, a strong IPO market, infrastructure spending, restructuring in banks and a supportive policy environment are expected to keep the country's GDP resilient in 2017, it added.