India’s M&A Activity Drives Deal Value Surge In August, Private Equity Deals Lag

Deal activity by India Inc witnessed a 38 percent year-on-year growth in value terms in August, driven by eight big-ticket deals worth more than $100 million.

The total deal value – mergers and acquisitions (M&A) as well as private equity (PE) transactions – stood at $3.6 billion compared to $2.6 billion in the same month a year ago, according to a report by Grant Thornton LLP.

The deal volume, however, declined 8 percent in the last month, with the total number of deals falling to 134 from 145 in the corresponding month of the previous year.

Mergers And Acquisitions Drive Deal Growth

Individually, M&A activity contributed $2.5 billion to the overall deal value in August, rising almost three times (or 179 percent) from $898 million in the same month last year.

The banking and financial services sector led deal activity by contributing 31 percent of total deal values.

“The month witnessed a big-ticket merger activity with the HDFC Standard and Max Life insurance deal, valued at above $777 million. This deal drove the deal activity in this segment,” the report said.

The telecom, agriculture and forestry, pharmaceuticals and manufacturing sectors saw big ticket deals worth values over $100 million each.

In terms of a sector spread, BFSI and telecom contributed significantly. Together, the two sectors contributed over 55 percent to the total M&A deal value, the report added.

Volume-wise, M&As in the startup sector dominated in the month August, constituting 31 percent of the M&A volumes with 15 deals worth $71 million.

Private Equity Deals Lag

Private equity investments fell for the third month in a row, with both total deal value and volume declining due to the absence of big ticket investments.

Deal values in August 2016 decreased 37 percent to $1.1 billion from $1.7 billion in the corresponding month of the previous year.

The startup sector contributed 37 percent to deal valuations, led by instant messaging application Hike Ltd. raising $175 million in its Series D funding from investors including Tencent Holdings, Foxconn, Tiger Global, Bharti Enterprises and Softbank Holdings.

Total deal volumes decreased 17 percent to 85 from 103, on a yearly basis. The startup sector added most to deal volumes too with 60 deals worth $399 million.

Manufacturing, and transport and logistics sectors too attracted large investments worth over $100 million in August.

‘India Outlook Bright'

Deal activity in India will surge in the next few quarters, the Grant Thornton report said.