The US market has listed India among the top 10 acquirers this year, with 16 deals valued at USD 1.7 billion, says Baker & MacKenzie. The Pharma sector with six deals summing to USD 1.5 billion shared the major percentage among these deals. Indian companies seeking to increase their scale in the US generic market, says report.
Ashok Lalwani, Global Head of Baker & MacKenzie’s India practice said “Indian companies particularly in the pharmaceutical sector, have been on acquisition rampage and I think this trend will continue in the near term given the low valuation and the need for Indian companies to increase their scale to compete in the increasingly competitive generic markets, as well to dip their toes into the innovator side of the business”.
Majority of the acquisitions were internally funded as Indian companies are rich in cash reserves, Ashok said “On the other hand, there is an uptick in Indian pharma companies knocking into the debt market for acquisition funding, as money continues to be relatively cheap right now”.
India is witnessing more M&A deals after 2015 and the county can also became ‘sweetheart for US dealmakers’, since Indian government is introducing reforms to the open economy for the foreign investors, suggest the reports.
However, there are few risks which can upset the market movement, these includes changes in the macro-economy. “If the US Federal Reserve increases interest rates faster than expected or China’s slowdown is greater than projected, it could create uncertainty that gives dealmakers pause” said Michael DeFranco, Baker& MacKenzie Global Head of M&A. he further added “There is optimism and dealmakers are moving India for that reason”.
In a global scenario, overall deal activity in the year till date is already touched USD 2.91 Trillion, far ahead of last year’s pace and cross-border transaction totaled at USD 1.05 Trillion. Indicating improvement in US Market, easing EU concerns and emerging opportunities in Asia Pacific.