According to JPMorgan Chase & Co., geopolitical tensions could drive companies to diversify into the South Asian nation. Thus dealmakers in India should expect another strong year for mergers and acquisitions.
With a global slump in deal activity, India ended its busiest M&A year in 2022 with transactions totalling around $191 billion, according to data compiled by Bloomberg. Nitin Maheshwari, head of M&A for India at JPMorgan, said that while it’s unlikely that the country will achieve such a high milestone this year, there will be enough deals to keep the bankers busy.
“China has been a bit difficult to deploy, so where can these managers go?” Maheshwari said in an interview. “You can go to Australia and Japan, which are both competitive in terms of capital. That’s why more capital will continue to flow into India, which is the biggest market for some global sponsors.”
Even though recent issues at billionaire Gautam Adani’s business empire have lessened its attractiveness, India — and its fast-growing economy — has emerged as a major bet for global financial firms. At the same time, China finds it difficult to draw investors after years of economic stagnation from its protracted Covid Zero policy and a crackdown on private enterprise, especially on its biggest tech firms.
Maheshwari said that this year’s deal flow in India would be driven by smaller transactions, with the majority falling between $500 million to $2 billion. He said that sectors such as technology, energy, speciality manufacturing, and health care are expected to be fairly active.
“Corporate clarity, financial sponsors, and switch from public to private track will likely be the three key drivers for M&A this year,” he said.