India beats China as popular M&A destination

India has emerged as the most popular destination for FTSE 100 companies looking to invest in emerging markets. New research by international law firm Freshfields claims that companies spent $645 billion on mergers and acquisitions in the last decade, with India accounting for $31 billion or around 4.8 per cent of total investment. Pratap Amin, chairman of Freshfield's India group, said: “India has been more open to international investment in a range of sectors over the past decade, particularly those that are capital-intensive and have needed international expertise. British companies have been keen to capitalise on the opportunity and make the most of established historical, cultural and diplomatic ties. “While Indian deal activity is undergoing a temporary slowdown, partly due to uncertainty over forthcoming political elections, India remains an important international destination for M&A.” The tally of Indian deals makes the country the fourth-largest destination for investment from UK companies. In contrast, China ranks 14th, Russia 7th and Brazil 10th. “Growth in China has been largely organic over the past decade and many international companies have gained a foothold in the region by pursuing joint venture models rather than outright acquisitions,” explains Amin. * Source: FTSE 100's top M&A destinations The UK was the primary target for M&A deals, accounting for $168 billion, while the US was close behind with $163 billion. Canada ranked third with $51 billion, with Spain, Australia, Sweden and South Africa also in the top 10. In total, the UK and US accounted for more than 50 per cent of all deals, with 81 per cent of investment focused on the top 10 countries. “The FTSE 100 investments over the past decade have been geographically concentrated, with more than three quarters targeting just 10 countries. When it comes to searching for faster growth, India has tended to be the front runner over the last 10 years,” said Edward Braham, head of corporate at Freshfields. Examples of the mega M&A deals include petroleum giant BP's tie-up with Reliance Industries, which was worth $7.2 billion. More recently, with India opening up its retail sector for foreign direct investment (FDI), Tesco has agreed a deal with Tata to launch a chain in the country. The above article was published in India Inc′s print edition of the India Investment Journal launched in April 2014 in conjunction with the Global Wealth Management Conclave 2014.