“Global buyers are very wary of purchasing assets in India right now given the political uncertainty,” said a London-based investment consultant. “Although assets of distressed promoters may be available at a good value, there is a continuous risk of how government policies will pan out and whether these assets will turn out to be cash burners for the buyer.”
Interest from buyers may revive during the calendar 2013 due to a resurgence in the stock markets.
“Generally it is seen that buoyant stock markets tend to stimulate M&A activity,” said Vinod Wadhwani, director at Ambit Corporate Finance. “Higher market capitalisation of their flagship businesses does encourage CEOs and promoters to initiate M&A activity and this also sometimes results in some wrong decisions.”
“As far as non-core assets M&A activity is concerned, they will continue to happen as the sellers of non-core assets who are strapped for cash will take the decision to sell irrespective of the state of the equity markets,” Wadhwani added.