(Bloomberg) -- Global companies and financial sponsors are keen to keep exploring both mergers and acquisitions and initial public offerings in India as they seek to tap into the country’s economic growth, according to top executives from JPMorgan Chase & Co.
Financial services, including insurance and banking, are attracting a lot of interest, according to JPMorgan’s head of investment banking in India Navin Wadhwani.
“We are seeing some amount of M&A activity from some of the global strategics especially in financial services,” Wadhwani said in an interview with Bloomberg TV on Monday.
India has turned into a hotspot for dealmaking activity as nearly $9 billion has been raised via IPOs this year, according to data compiled by Bloomberg. The volume of deals involving Indian companies has climbed 28% to $77 billion, the data show.
There are a number of big-ticket financial services deals in the works in India, including stakes in Yes Bank Ltd. and IDBI Bank Ltd. which have lured interest from Japan and the Middle East. Zurich Insurance Group AG bought a majority stake in Kotak General Insurance Company Ltd., becoming the first foreign insurer to enter India after rules were relaxed. A BPEA EQT AB-led consortium last year agreed to buy a majority stake in Housing Development Finance Corp.’s unit that offers student loans, in one of the biggest private equity financial sector deals in India.
The average M&A volume has increased annually to $140 billion from 2021 to 2024 year-to-date, double of what it was from 2011 to 2020, the JPMorgan executive said.
“There are a lot of activities from financial sponsors and private equities are very actively buying and selling and building businesses,” Wadhwani said. “That activity will continue.”
Unlike in the past when global companies wanted to do big transactions, they are now adopting a partnership approach with domestic companies, including setting up joint ventures and taking strategic minority positions, he added.
India, China Growth
Beyond M&A and JVs, several multinationals are considering listings of their Indian units to tap into the country’s economic growth, the JPMorgan executive said.
Hyundai Motor Co. is planning to sell shares in its local Indian unit this year in what could be one of the biggest-ever listings in India, people familiar with the matter have said. LG Electronics Inc. has picked banks for a potential listing of its Indian business that could raise as much as $1.5 billion, Bloomberg News has reported.
“Emerging markets portfolio managers globally are under allocated to the Indian market,” JPMorgan’s global head of capital markets Kevin Foley said in a separate interview with Bloomberg TV. “They are looking to allocate more capital to this part of the world.”
More capital is likely to flow into sectors such as clean energy and infrastructure, Foley said.
Foley said there are opportunities in both India and China as both markets will continue to grow.
“It is not necessarily one over the other,” Foley said. “There is going to be huge opportunities in both the markets with a little more momentum in India.”
--With assistance from Baiju Kalesh.
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