Citigroup Predicts Surge in Mergers and Acquisitions in India, Driven by Global Investments

Citigroup Inc.’s top executive in India, Rahul Saraf, anticipates a substantial rise in merger and acquisition (M&A) activities across the country this year. The growth is expected to be fueled by investments from sovereign wealth funds, particularly from the Middle East, and other international sources. According to Saraf, the spectrum of investments will encompass outright acquisitions, greenfield projects, and partnerships.

The surge in dealmaking is projected to span various sectors, including industrials, manufacturing, information technology services, and insurance. Additionally, some consolidation among shadow banks is anticipated. Financial sponsors, pension funds, and sovereign wealth funds from the US, Canada, Singapore, and other regions are increasingly acquiring controlling stakes in Indian infrastructure companies, real estate, and green energy to capitalize on the country’s economic growth.

Despite global economic conditions, Saraf expressed confidence in India’s growth trajectory, asserting, “India is moving to a different orbit.” He highlighted the continuous attractiveness of the country for capital influx, with an expected second wave of investments from private equity, sovereign, and pension funds that have gained a better understanding of the Indian market.

Singapore’s Temasek Holdings Pte and Bain Capital are among the entities planning substantial investments in India, emphasizing the country’s potential as a top growth driver. Saraf also noted a growing trend of mid-size companies attracting attention, reinforcing the notion that opportunities abound across various sectors in India.

The Middle East is emerging as a significant player, with the United Arab Emirates considering substantial investments, including contributions from sovereign wealth funds like the Abu Dhabi Investment Authority, Mubadala Investment Co., and ADQ.

Citigroup, having secured a 12% share from announced India deals last year, is poised to benefit from the anticipated increase in M&A activities. Saraf expressed optimism, describing the bank’s performance as “great” in a competitive market with 25 banks.