Cement sector fuels Indian M&A record

Adani Group’s acquisition of Ambuja Cements and ACC has contributed to a new record in merger and acquisition (M&A) activity in India. According to data by Refinitiv, the value of M&A deals in India has risen by 58 per cent YoY to US$158bn in the first nine months of 2022, coming in higher than the full-year total in both 2018 and 2021. The nine-month period saw 1795 M&A deals being struck, up 21 per cent YoY, marking another record according to Mint. Analysts believe India could soon become a US$200m M&A market.

“We have seen a couple of very large deals in the financial services and cement sectors. Indian M&A is at an inflection point and could see M&A activity close to US$200bn a year in the near future on a sustained basis. This year, we have seen the volumes of M&A deals go up, driven by a few large deals and other deals diversified across sectors," said S Ramesh, managing director and CEO of Kotak Investment Banking.

According to Mr Ramesh, several factors are driving the M&A activity, such as reasonable valuations, large pools of capital available with private equity investors, and the return of foreign strategic investors. "In many businesses and sectors, valuations are reasonable; therefore, buyers are happy to grow inorganically. In select cases, foreign buyers have also come back into play. There is growth restriction in their home markets, and they have to look at larger growth markets for their future, so they are evaluating the Indian market seriously,” he added.

Going forward, renewable energy is expected to see strong M&A activity in India as companies focus on transitioning to green assets and clean energy.