Organic growth is no longer enough to conquer the modern consumer market. Across the board — from L’Oreal to Hindustan Unilever, Tata Consumer Products, and Coca-Cola — FMCG giants have been snapping up brands to secure market share. Global financial services group Rothschild & Co has been advising companies on a range of transactions, including Coca-Cola’s move to divest 40 per cent stake in HCCB to Jubilant Bhartia Group. It has also been retained to advise the beverage major on the potential public listing of HCCB in India. In an interaction with businessline, Subhakanta Bal, Managing Director and Head of Healthcare and Consumer (India) at Rothschild & Co, spoke on the rising M&A activity in the consumer sector.
How is the current M&A landscape in the consumer sector? Is there an uptick in the deals Rothschild & Co is advising on in India?
I would say M&A activity in the consumer sector has seen an uptick over time. This is one of the few sectors where we see significant interest from both private equity funds and strategic investors. Historically the challenge has been the lack of assets available for M&A. That seems to have changed. We have seen a wide pool of buyers showing interest in the inorganic route, including international players. We have also seen a willingness to pay attractive valuations for assets. If one looks at some of the deals over the last 2-3 years, we have seen pretty punchy outcomes in valuations. We have also seen a pretty reasonable amount of private equity activity in this sector. Within consumer, there has been strong M&A activity in segments including food and beverage, and beauty and personal care. We have also seen a fair bit of activity in the B2B consumer segments that are essentially suppliers to branded playersThe level of M&A activity in the consumer sector will be less about buyer interest and financing and more about availability of assets. For us, globally, the consumer sector is the biggest amongst the core sectors. In India, in the last five to six years, there has certainly been a pick-up in activity in the consumer sector for us, in terms of the volume of transactions we are advising on.
