21世纪经济报道 (21st Century Business Herald)
Morrison & Foerster partner Amit Kataria shared his thoughts on M&A trends and activities in India in 2018 and the outlook for 2019 in the 21st Century Business Herald article, “Focusing on M&A.”
According to Mr. Kataria, “2018 saw a surge in consolidations through M&A transactions within India, which could be seen in the mega M&A deals announced and completed in 2018. Apart from economic and geo-political factors, some of the key drivers for M&A activity in 2018 are the recent clarifications of the foreign direct investment regime, rationalization of certain investment terms generally sought by foreign investors, streamlining of the arbitration mechanism, legislation of cross-border merger regulations, and implementation of the Insolvency and Bankruptcy Code.”
He pointed out that, after the implementation of the Insolvency and Bankruptcy Code, many distressed assets were on the block. With various factors in play adding to a growing economy – including the consolidation of several sectors like insurance, telecom, and the especially active e-commerce sector, as well as the need of companies selling their non-core assets to reduce debt and clean up their balance sheets – India M&A deals, as expected, touched record numbers in 2018.
Mr. Kataria believes that the outlook for 2019 remains positive, and the significant steps implemented by the Indian government to attract foreign investment will continue to be beneficial. While investor sentiment can be a little uncertain around elections, any volatility is generally not long term. Overall, the elections won’t have a far-reaching impact on investor decisions or investor confidence in India.
He further noted that technology, consumer & e-commerce, infrastructure, energy, renewables, manufacturing, and real estate sectors figure to be attractive sectors for M&A in 2019. Certain core sectors like steel, telecom, and oil & gas could also witness notable activity.
“With the notification of the Foreign Exchange Management (Cross Border Merger) Regulations in 2018, perhaps some cross-border M&A deal activity could also occur – though the framework is still in a relatively nascent stage,” he added.