India M&A volume to rise amid IPO market slowdown, JPMorgan says

A person looks at a screen and electronic ticker board show outside the Bombay Stock Exchange (BSE) building in Mumbai, India, on Monday, March 9, 2020. A top Indian official said there's no need for the government to take immediate steps to support the economy following a crash in oil prices that has sent financial markets into a tailspin. Photographer: Dhiraj Singh/Bloomberg

Mergers and acquisitions have become an important solution for investors facing a slowdown in India’s equity capital markets, according to JPMorgan Chase & Co.

“India is a super important market for sovereign funds, private equity and global pension funds, who are taking an increasingly important role in the number of M&A transactions that are currently happening,” Kaustubh Kulkarni, vice chairman for APAC, investment banking India head and Southeast Asia co-head, said in a Bloomberg Television interview on Tuesday.

“The Indian market will offer larger size, larger quality and greater scale of investment for those investors to deploy those capital,” he added.

India saw about $82 billion pending and completed M&A deals in the second quarter, the busiest ever, according to data compiled by Bloomberg.

Kulkarni expects this year’s deal volumes to be bigger than those in 2021, driven by major themes including infrastructure and industrials. M&A will be big not only for the next six months but the coming two years, he said.

The banker expects the Indian initial public offering market to pick up in October, as participants will have a better sense of the impact of both inflation and interest rates. The pipeline for listings is larger and more robust than it was last year, Kulkarni said, but a resurgence later in the year leaves just three months to get all the deals done.

“Volumes will be down, transactions will get pushed to next year and volumes will pick up again in 2023,” Kulkarni said.