The Hindu Business Line : Re appreciation opens new M&A opportunity for India: Assocham

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Re appreciation opens new M&A opportunity for India: Assocham

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New Delhi, Nov 6 Appreciation of rupee against the dollar has thrown a new M&A opportunity for India Inc, which wants to reach out to the world by acquiring concerns on a global scale, according to the industry chamber, Assocham.

A study done by the chamber of 70 deals done overseas in the first six months of the current fiscal, in which Indian firms undertook buyouts worth $14 billion, has revealed that Indian companies would have saved Rs 6,500 crore ($1.66 billion) because of increase in rupee value.

IT sector

While home grown IT companies are struggling to cope with the rupee pressure, the currency appreciation has given an advantage in terms of prospects for inorganic growth worldwide.

The IT sector which dominated the overseas M&A activity of the domestic firms in the second quarter with deal valuation worth $1.56 billion, its total savings have been to the tune of Rs 795 crore in first half of the current year.

Thanks to a continuous decline in dollar value, the US had remained the most favourite hunting ground for the Indian companies in both first and second quarter.

Even as the overall overseas buyouts declined by 64 per cent in the second quarter, the deal valuations announced with the US based companies remained the same at $2.9 billion for both quarters.

Buyout activity

On the other hand, Europe, where the currency depreciation of euro against rupee was around four per cent since March this year, the buyout activity of the Indian companies witnessed a severe decline of 88 per cent in second quarter as compared to the first quarter.

The valuation declined from $2.89 billion in the first quarter to $326 million in second quarter.

“While the absence of big ticket overseas acquisitions and global slowdown can be held responsible for the sharp decline in the merger and acquisition activities by domestic firms in international market, rupee appreciation played an important role in keeping the buyout activity of India Inc intact in the US”, said Mr Venugopal Dhoot, President, Assocham.