M&A, PE investors bet big on India; deal pipeline hots up

Last quarter, mergers and acquisitions (M&A) and private equity (PE) deals touched a high of USD 800 million alone. But while the deal pipeline looks significant, there are only specific sectors that seem to have caught the interest of PE players, reports CNBC-TV18's Kritika Saxena.

After a lull of two years, M&A and PE deals are back. Private equity investors are now looking at spending big bucks in the Asian market, and India seems to be in focus. 

Gaurav Mathur, MD, IEP Fund Advisors said, "PE deals have picked up sudden momentum. The reason really is that since 2008 or so, the markets have become stable. It is owing to this stability that PE players are wiling to invest more."

So, infrastructure, engineering, healthcare and education are hot sectors, but the hottest seems to be agriculture.

Said Ajay Saraf, Senior GM, ICICI Bank, "We are seeing heightened activity coming in terms of PE interest in the agri corporates as well as the outbound M&A deals which the Indian corporates are looking at investing in. So it is a very robust pipeline that we have seen in the last one quarter."

Nalin Kumar, MD, Rabo India said, "There are two types of acquisition deals that are happening in India. One is people moving into more emerging markets and the second is going to the international market in the developed space."

And the average deal size has also increased.

Bhavesh A Shah, ED-iBanking, JM Financial said, "The average deal size has sure picked. So we have seen that deals are increasing from USD 20-30 million to a minimum of USD 50 million now."

So, private equity deals and M&A deals are definitely back in favour. But while FY11 may see significant acquisitions, it will also mark the year for strategic exits across sectors.