Nomura expects mid-sized companies to drive India M&A

Nomura expects mid-sized companies to drive India M&A

Nomura Holdings Inc. expects mergers and acquisitions in India will regain momentum after a slow start this year, as Indian and overseas companies look to join private equity and sovereign wealth funds in buying assets.

“Indian corporates will start becoming buyers of assets rather than sellers,” Amit Thawani, head of India coverage investment banking at Nomura, said in an interview with Bloomberg Television on Thursday.

“That’s an interesting trend that started with large conglomerates buying assets over the past two to three years, consolidating sectors, and now with even the mid-tier corporates, which are looking to do the same,” Thawani said.

Indian M&A activity this year started slowly compared to last year, when it clocked its highest-ever volume of $191 billion. The surge was primarily driven by the $60 billion takeover of India’s largest mortgage lender Housing Development Finance Corp. by the country’s most valuable bank, HDFC Bank Ltd.

India will have a fairly healthy and robust environment for deals, and continues to be a favored destination for global investors, Thawani said. He expects a fair amount of activity across defensive sectors such as health care, pharmaceuticals, renewable energy and industrials.

Historically, only private equity funds were buying assets for the last four or five years, and that is changing, Thawani said.

“It’s not only going to be driven by private equity funds, it’s going to be driven also by strategics, both domestic strategics and international strategics,” he said.