New Delhi: The value of mergers and acquisition in India is expected to reach $50 billion in 2007, says CII in a new report. The acquisition of the Anglo-Dutch company Corus by Tata Steel for nearly $12 billion and Canada's Novelis by Hindalco, has set what is expected to become the trend for mega deals by Indian companies.

According to Sarita Nagpal, manufacturing services division head, CII, the M&A scenario in India had witnessed radical changes with 2007 expected to account for deals worth $50 billion, compared to just $16.3 billion two years ago.

She said, the total value of M&A deals India has been growing at a compounded annual growth rate of 28 per cent since 2002 and crossed $20 billion in 2006. Out of the 480 M&A deals in 2006 amounting to $20.3 billion, Indian companies reported 266 cross-border deals worth $15.3 billion.

Buoyed by a liberal and conducive environment that enables them to raise the large investments required, Indian companies today are much more aggressive than earlier, to the extent that for the first time ever, Indian overseas investment will surpass foreign investment in India.

"Indian companies are spreading their wings beyond borders and acquiring foreign assets to serve global markets," said Nagpal. She noted that the total value of M&A deals in India has been growing at a compounded annual growth rate of around 28 per cent between 2002 and 2006.

Citing a report by global consultancy firm Grant Thornton, CII said, "The number of cross-border deals from India in 2006 grew much faster than domestic deals."

The CII report noted that the largest proportion of acquisitions abroad was largest in North America (with 32 per cent of total acquisitions) followed by 29 per cent in Europe, which is fast emerging as a favourable investment destination for Indian companies.

The Indian pharma sector has been aggressive in exploring investment opportunities abroad, with a total deal signed for over $2.2 billion. This is closely followed by the Indian IT and ITeS sector and the energy sectors, CII said.

"ONGC's acquisition of equity stakes in a couple of oil blocks in Columbia and Brazil as also Suzlon Energy's acquisition of Hansen led the M&A deals."

However, according to the body, acquisition-financing options in India have still not matured in its full potential. But the role of structured finance transactions is becoming more and more important.

"Indian companies are likely to take ever larger steps globally, particularly in the US and Europe, while the scale of domestic Indian companies will continue to attract both strategic and private equity interests, the latter fuelled by the growing funds raised from Western investors seeking high returns," Nagpal said.