JPMorgan Investor Summit: India Favourite Destination For Institutional Capital, Says Rohit Chatterji

India will continue to be a favourite destination for institutional capital for at least the next couple of years, with many sectors getting opportunities for domestic consolidation, according to JPMorgan Chase & Co.'s Rohit Chatterji.

"In mergers and acquisitions, what you need is confidence in the outlook," the head of mergers and acquisitions, Asia Pacific, said at the financial services firm's India Investor Summit in Mumbai.

The macroeconomic environment is constantly changing, and it can be difficult. But at the end of rate hikes, consumers realise what the new normal will likely be for the following few years, which gives them the confidence to proceed with the transactions, according to Chatterji.

There are seven to eight big markets, with the overall activity level being very high, unlike capital markets, which tend to move in tandem across the globe in general, he said.

In the merger and acquisition world, every market has a theme that plays out that is a little bit different. While some markets may be a little bit subdued, the others, including India, are compensating very strongly, Chatterji said.

In India, financial sponsors have done really well over the last three–four years. The consumer and healthcare sectors are booming, and capital is flowing into tech services and infrastructure, he said.

"India continues to be the favourite destination for institutional capital for this and the next couple of years as well."

"Japan, India, and South Korea are active markets this year in mergers and acquisitions. China is (a) little bit subdued, while Australia is active in certain sectors," Chatterji said.

He underscored that Southeast Asia saw a lot of domestic consolidation as these markets are small and many sectors like financial, telecom, and retail have opportunities for domestic consolidation.

Chatterji said there are many themes in India that will keep coming up over time, and tech services and healthcare are also gaining funding. "You cannot suddenly create (a) manufacturing base to become (an) alternate destination for supply-chain investments. It's a work in progress."

"On the organic side, there will be more capacity being created in India by local conglomerates and multinational companies by creating greenfield investment," he said. "Also, businesses that are held by Indian families might change hands, and private equity might own them and build on them."

Private equity is starting to take a look at certain sectors like chemicals, active pharmaceutical ingredients, and things that eventually become mainstream in the global supply chain, Chatterji said.

Geopolitics is more often the cause of headwinds than anything else. Greater uncertainty surrounds what the next year or two may entail due to disruption brought on by the interest rate outlook and macroeconomic factors, he said. "Mergers and acquisitions may have a slight setback, but the worst is already behind us."