• Indiarivals China as centre for M&A in Asia
• Number of deals for Indian firms overtakes its larger neighbour
• Keen interest from US buyers driving activity
• Financial services, software and ecommerce account for lion’s share of deals.

India’s mergers and acquisitions boom has seen it challenge China for the title of the M&A capital of emerging markets, according to analysis by M&A and debt advisory specialists Livingstone.

The first half of the year saw 109 M&A deals in which the target had a presence in India, just two fewer than in China, which has dominated M&A in recent years. When only the main domicile of the companies is considered, India has already overtaken its larger neighbour.

India was also responsible for far the biggest deal of the period: Vodafone India’s $10.25 billion merger with Idea Cellular, which is expected to be completed in the first quarter of next year.

Activity in the country is driven by domestic companies but is also combined with particularly strong international interest. In contrast to China, where well over half of buyers were from the mainland or Hong Kong, two thirds of deals in the first half in India were the result of overseas interest.

North American buyers, led by the US, were most active, accounting for more than half of inbound M&A – 40 deals in total (33 from the US and seven from Canada). Buyers also came from France, the UK, China, Singapore, Japan and a host of other nations.

“Despite the regulatory challenges that remain, India is a rising star for international buyers,” said Livingstone Partner Jeremey Furniss. “M&A and international interest in the country is booming.”

A triumph of technology

Overall, business services saw the greatest number of deals in the period (44), boosted by strong interest in the financial services sector, with 12 deals, most of them with international buyers.

Technology was also strong, with a dozen deals each involving computer software firms and businesses focused on the internet and ecommerce – the majority, again, driven by international acquisitions. After the Vodafone deal, tech giant Microsoft’s $1.13 billion investment in Flipkart, India’s biggest ecommerce marketplace, was the largest deal reported in the six months covered.

Strength in India contrasts with China, which has seen a big slow down in M&A in the last year. Despite strong growth continuing to surprise forecasters, Chinese government efforts to rebalance the country’s economy away from heavy industry have had impact an M&A in the country.

Nevertheless, China continues to attract international buyers from both the US and Europe, and is also strong in technology: Between them, internet and ecommerce businesses and software firms accounted for more than a fifth of all M&A in China in the first six months, with half the deals involving international bidders.

“The expected slowdown in China is likely to benefit Indian businesses looking to sell, but the country will remain a key territory for acquisitive businesses looking for opportunities in the big emerging markets,” said Jeremey Furniss. “The region as a whole continues to offer exciting prospects for overseas buyers.”