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M&A or financing activity is possible only in those places where substantial capital has already been invested or substantial investment has been made in the past, he said.
As such, the two big drivers of M&A are state-owned infrastructural assets and private equity, Kulkarni said.
Infrastructural assets are those where the government has already spent enormous amount of funds for development across various categories. And now, given the government’s “need” to continue investing in infrastructure, it will have to “free up” the existing capital that it has deployed in the last five years, he said.
According to him, private equity has good scope, looking at the scale at which investment has multiplied in the past few years. This, as per Kulkarni, applies to both mainstream companies as well as venture capital and investors in start-ups.
“As most investors have a finite life for their funds, which they would look forward to monetise, that will give the second big leg to M&A and financing transactions.”
“The existing investments made two-five years ago, will search for an exit and return, if not all, but some of the capital to their respective unit/fund holders,” he said.
There are also a number of new businesses emerging in the energy consumption space: electric vehicles, batteries, hi-tech manufacturing, among others. These will require substantial capital investment funding, he said, and attract both strategic and financial capital.
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