According to consultancy firm EY’s 14th biannual Global Capital Confidence Barometer(CCB) Technology report, Indian has retained its spot among the top three most attractive destination for foreign investments and acquisitions.
Based on EY’s survey that covered over 182 technology executives from around the world, including senior managers and tech personnel have crowned the U.S, U.K, India, China and Germany as the top five destinations for technology investment in that very order.
The report suggests that merger and acquisition activity in India will remain positive as a result of strong and improving fundamentals. Over 95 per cent of the tech respondents in India are expecting the local M&A market to stay stable and expand over the next 12 months. But, they also air concerns over the volatile nature of commodity and currency prices in the country.
The report lays focus on Indian governments efforts to improve economy and says that,
The risk-return profile on the domestic front appears attractive as compared with overseas markets, which is also providing the required impetus to domestic M&A. The Government’s continuous focus on economic reforms, such as the opening up of foreign direct investments in different sectors, coupled with the improving liquidity scenario, is also supporting this trend.
Economic and political instability including the impact of strong U.S dollar and weak oil prices have tempered the optimism of the technological investors. The tech deals have risen by 2 per cent this past year, amounting to 1,002 deals according to EY.
Domestic M&A activity is expected to rise and drive debt-ridden companies to focus on de-leveraging their balance sheets by selling non-core assets. Life sciences is the most robust and preferred sector in terms on acquisitions, followed by diversified sectors like industrial products, automation, transportation and technology.
According to the survey and data collected by EY, India is one of the fastest growing technology hubs, and is at par with the global tech standards. The number of hires, the margin improvement in sales, merger and acquisitions all have gone up since the past year and is competitive with global players, like the U.K and U.S.
EY believes that India’s IT market is currently under-going transformation with the rise of a multitude of internet-enabled startups and tech services. There also has been a marked improvement in the investments scenario of the country.
Most recent and notable investments have been attracted by cloud-based platforms and companies, amounting to over $1 billion, including major players active in the space. Overall EY’s survey indicates that,
In terms of outbound acquisitions, Indian executives intend to selectively evaluate value-rich acquisition opportunities with a focus on expanding into other markets and broadening their product and service portfolio.