Polls put brakes in MAS in power, infrastructure sectors
Brakes have been put on mergers and acquisitions activity in the power and infrastructure space due to general elections. Earlier Infrastructure developers which were anxiously investigating for investors are now pushing negotiations waiting for elections as they suppose that a stable new government may increase their threadbare valuations.
Conversely, the investors are going through deals but are probable to wait in anticipation of the dust.
General elections of 2014 in India will be held on 7 April and its result will be declared on May 16.
The infrastructure sector would get an explosion in the arm irrespective of which party comes to power as it is expected to work on removing the obstacles that have affected the growth of sector in the past couple of years as per Industry executives.
DV Raju, vice-president, National Highway Builders Federation alleged, “Developers believe it is wise to wait for the new government to take over and things to stabilise so that they don’t have to discount for the lack of clarity on policy issues. People are still negotiating deals but the next few months would be a lean period.”
Infrastructure developers
Infrastructure developers are short of money such as Lanco, Jaiprakash Associates, GMR, GVK, some of them have put quite a few road and power projects on the wedge in expectance floating as the revenue declines and banks shove them to accelerate fund raising.
To get a trouble-free footing into India’s infrastructure sector that throws up several entry-barrier challenges, foreign investors are eager to pick up projects, lured by cheap valuation and the temptation. In the last two years, uncertainty over policies and dull outlook for economic growth weighed on transactions but deals are likely to pick up towards the end of 2014-15 because of constrained demand among buyers and soaring level of financial stress among sellers.
Manish Aggarwal, partner (Corporate Finance, Infrastructure & Government Services) and head (energy and natural resources) at KPMG India alleged, much-needed comfort has been provided by the recent deals to the investors that things are moving in the right direction. They are taking a closer look at the opportunities and re-engaging themselves critically.
Sole financial advisors to Meenakshi Group for the recent venture sale to french energy conglomerate GDF Suez, Aggarwal says that investors are looking towards India after recent deals, with renewed interest but more deals may happen only in a year’s time when result of policy initiatives is visible.
Source: Economic Times
Acquisitions, Corporate Finance, DV Raju, Economic growth, Elections, Energy and natural resources, Foreign investors, GDF Suez, GMR, Government, GVK, Industry executives, Infrastructure & Government Services, Infrastructure developers, Investors, Jaiprakash Associates, KPMG India, Lanco, Manish Aggarwal, Meenakshi Group, Mergers, National Highway Builders Federation
