Developed market targeted M&A deals rise 25%

Portraying a strong rebound in their deal-making confidence, emerging markets led by India saw 25 per cent rise in merger and acquisitions deals targeted towards developed markets in the past six months, a study by global consultancy KPMG said.

According to the latest Emerging Markets International Acquisition Tracker report, 243 emerging-to-developed deals were recorded in the first half of 2010, compared to 194 in the second half of 2009.

"The 25 per cent increase in E2D deals was in no small part due to a resurgent India. After three relatively quiet six month periods, India recorded 50 deals well up on the 21 of the previous six months," the report stated.

China was also up by nine deals to 39, while South East Asia jumped from 34 to 47 deals.

Although there has been a rise in emerging to developed market deals in the past six months, the number of deals from western markets targeting developing market firms' remains higher.

The report revealed that 748 developed-to-emerging deals have been witnessed in the past six months showing a nine per cent increase over the previous six-month period.

"The findings suggest that deal-making confidence is returning far quicker in emerging economies than in developed market.

In absolute terms, E2D deals still only equate to 32 per cent of D2E deals in the past six months, but it is apparent that they have worked through their financial crisis hangover far quicker," KPMG chairman, high growth markets practice in the UK, Ian Gomes, said.

"By contrast, I sense a degree of reticence amongst many of the developed economy trade buyers to get back on the M&A trail before all the nagging doubts over double dip recessions and sovereign debt fall-outs have fully receded," Gomes added.

The research analysed deal flows between 13 emerging economies, including India, China, Brazil, Russia, South Africa, Central & Eastern Europe and 15 developed economies such as US, UK, Canada, Spain, France, Japan among others.

Interestingly, an average of 202 emerging-to-emerging cross-border deals per year have been witnessed since the start of 2003.

This represents 1,518 deals struck in 7.5 years driven by growing stature of emerging economy trade buyers.

On the E2E front, analysis of the numbers going back to 2003 reveals that South East Asia has been the most popular destination, registering 302 inbound deals.

China was the next most popular market with 197 deals, while India registered 167 deals.