India is emerging as one of the most preferred private banking destinations at a time when the global private banking and wealth management industry is witnessing a boom in the mergers and acquisition activity, a KPMG report has said.
Global consultancy firm KPMG in its report titled 'Hungry for more Acquisition appetite and strategy in the global private banking and wealth management industry', said with robust and liquid financial markets enabling exits on a timely basis to realise gains, India is a good resource deployment avenue.
"India's economy is growing at eight per cent per annum and is going through a transformation to the next level of maturity. This enables double digit returns on most asset classes, which is not so in a majority of countries, making India a preferred private banking destination," Abizer Diwanji, head, transaction services, KPMG, India, said.
Increased earning levels have resulted in a high savings rate, which is an emerging trend in India. "This has resulted in a robust private banking capital raising avenue. Indian private banking capital would soon fund deployments to a significant part of our capital needs," Diwanji added.
The M&A activity in the global private banking and wealth management industry is booming, with 258 deals completed in 2005 alone, up 80 per cent from the previous year, the report, based on interviews with 147 private banks across the world, said.
With over 90 per cent of private banks opining that there are good prospects for the industry over the next three years and 89 per cent actively seeking acquisition targets and considering acquisition if the right opportunity arose, the level of activity is likely to persist, it added.
The growth of personal wealth in Asian economies is providing the greatest impetus to the M&A activity. About 45 per cent of all deals in 2005 took place in the Asia Pacific region with a majority of respondents naming China and India, as countries they sought expansion in, the report said.
The surge in M&A activity, however, has its own set of challenges. Half of the respondents cited price expectations of vendors as an obstacle to M&A activity. On the other hand, four out of ten deals failed to be consummated due to price demands by sellers, the report said.
