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BP, Vodafone lead India M&A

The Indian economy is shifting into high gear, going by the four-fold increase in acquisitions and mergers reported by FT-owned Merger Markets.

Value of mergers and acquisitions were up 271% in the three months ended March this year, hitting $18.3 billion. The value is second highest quarterly M&A size in Indian history, and second only to the second quarter of 2010.

The primary reason for the jump was the $7.2 billion BP deal to take a 30% stake in several of Reliance Industries’ oil and gas fields.

However, even without including the sale, the value of the deals were up nearly 120%, thanks to the $5 billion acquisition of 33% of Vodafone Essar by Vodafone.

Vodafone announced it was buying off its minority partner under a 5-year-old option granted at the time of entry into India. Excluding the two deals, the market was more or less flat.

Merger Markets pointed out an important difference in the India scene, compared to its neighbours like China.

“Cross-border deals dominate the top deals table, with four inbound and one outbound deals qualifying as the five largest deals announced in Q1 2011.

“The $16.9bn worth of inbound Indian deals [acquisition by foreign firms] is the largest number in mergermarket’s records.

“Out of all the deals that took place in India this quarter, 35 deals, 61.4% of all the activities, in India were inbound deals – significant portion compared to 27.1% for China or 14.3% for Japan,” it pointed out.

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