Election results brighten prospects for M&A in 2019

By Iqbal Khan, Shardul Amarchand Mangaldas & Co

Even with all the euphoria around India’s elections results, the country’s key economic indicators remain depressed. If the economists are right, one of Asia’s largest economies seems to be losing its glitter and sheen. Sales across consumer goods, autos and tractors have slumped. The index of industrial production is stagnant and unemployment rate is above 7%. India’s economy grew at a six-quarter low of 6.6% in the fourth quarter of 2018. Gross domestic product (GDP) growth for FY19 is pegged at between 7.3% and 7.5%, depending on whose estimates you rely on.

Election results
Iqbal Khan
Shardul Amarchand Mangaldas & Co

But even with all the lacklustre economic data, India remains a major bright spot in an otherwise uncertain global economic narrative. There is a heavy burden of expectations from the new government’s budget to be presented in July, with the hope, that a bold set of reforms will help to kick-start private consumption, rejuvenate the rural economy and accelerate public expenditure in areas like infrastructure development.

Even as we anticipate what the inaugural budget will hold, the market for private equity (PE) investments in India, remains bright. 2018 was a watershed year for PE and venture capital (VC) firms in India with investments peaking at US$35.8 billion and exits at US$26 billion. Fundraising by PE/VCs rose by nearly 40% year on year, adding to the vast reserves of dry powder already available in the market.

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Iqbal Khan is a senior partner at Shardul Amarchand Mangaldas & Co.

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