Shifting Centre of Gravity

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Mergers & Acquisitions in India—A Canadian perspective

India is arguably the world’s most promising emerging market. On its current growth trajectory, India is expected to become the world’s third largest economy by 2050. India’s growth story, based on the structural strengths of a skilled young population, rising savings and investment rates, large unfulfilled domestic demand, and globally competitive returns, has spurred M&A action, both inbound and outbound, during the past decade.

The geographic proximity of Europe and Asia has meant that these two regions have been India’s main deal partners. Since 2005, however, North America has been a significant player in cross-border Indian M&A activity. Regrettably for Canadians, the lion’s share of Indian activity has been to and from the US—cross border deals with Canadians have been few. Rather than dwell on the reasons and implications of historic precedent, PwC’s perspective is that Canada has an opportunity to be front and center in the next generation of Indian deal-making. Indeed, the dynamics of the post-crisis economy and a number of emerging deal drivers suggest that transacting with India may be a promising new frontier for Canadian deal makers.

While offering tremendous opportunities, cross border deals do have unique dimensions of complexity that must be appreciated. This publication’s aim is twofold—to provide insight into Indo-Canadian deal trends and opportunities and to arm Canadians with a reference guide of relevant deal-related regulatory matters.

Our Perspective: The time is right for Canadians to step onto the global stage

The global economic centre of gravity is shifting. We expect that by 2050 the E7 Economies1, measured by GDP at market rates, will be 50% larger than the current G72. We also expect that by 2025 at least one of the E7 countries will surpass the US as the world’s largest economy.

Canada must capitalize on this global realignment or risk being left behind. We remain overly reliant on slow-growing G7 nations, especially the United States. Consider that Canada is:

  • A global leader in resources, including energy, mining, chemicals and agriculture-the building blocks for emerging market industrialization and urbanization
  • Fiscally stable, with the strongest balance sheet amongst the G7
  • Home to a stable, functioning banking system and a well-capitalized corporate sector, arguably the best in the world
  • Extremely well regarded by the international community

Our view is that Canadians should explore M&A, in addition to or instead of organic growth, as a means to tap into emerging world growth. This report, Doing Deals with India, is the first in a series of pieces exploring the dynamics and logistics of M&A with the emerging world, from a Canadian perspective.

Fortune favours the brave. It is not time for Canada to rest on our laurels – it is time to step onto the global stage.

1E7 = China, India, Brazil, Russia, Mexico, Indonesia and Turkey

2G7 = US, Japan, Germany, UK, France, Italy and Canada