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India’s M&A activity witnessed a significant year-on-year jump in the second quarter of calendar 2018 (2Q18), with the disclosed deal value rising to $34.8 billion. This is a 6.8 times rise from $5.1 billion recorded during the same period of last year.
The deal volume also rose 19 per cent to 273 deals, riding mainly on six big ticket deals of more than $1 billion in 2Q18. The biggest deal in this quarter was the $16-billion acquisition of Flipkart by Walmart, which accounted for 46 per cent of the total disclosed deal value, according to an EY report.
Acquisitions
From a sectoral perspective, financial services (39 deals of value $1.1 billion) recorded the highest number of deals and consumer products and retail (30 deals at $16.5 billion) dominated in terms of deal value. Telecom (2 deals at $5.4 billion), diversified industrial products (23 deals at $2.9 billion) and metals and mining (6 deals at $960 million) were also in the limelight as they clocked substantially high deal value, it added.
“M&A activity is expected to stay positive in the coming quarters, on the back of continued interest of financial and strategic investors in the Indian market. Domestic activity should strengthen further as players across sectors look to expand scale, de-leverage balance sheets and innovate their offerings through increased usage of new technologies,” Amit Khandelwal, Managing Partner, Transaction Advisory Services at EY said.
Cross-border activity
The cross-border M&A activity in 2Q18 was record high as the inbound deal value reached $23.2 billion across 69 deals, on the back of the Walmart-Flipkart deal. Even after excluding the above mentioned deal, the inbound activity remained impressive with 68 deals worth $7.2 billion, highlighting the difference from the last few quarters and reinforcing the confidence in India’s growth story.
The US continued to be the most active cross-border M&A partner for Indian companies during the quarter, with a total of 26 deals (18 inbound and 8 outbound deals) for a total disclosed value of $16.6 billion. Japan, the UK and Netherlands emerged as other key partners with investments across sectors.
The outbound activity (34 deals worth $990 million) also showed YoY improvement in both value and volume terms, but was sub-par when compared to the long-term quarterly average, it added.
The domestic activity was ahead in volume terms and recorded a significant YoY jump both in deal count and disclosed deal value. The domestic landscape witnessed 170 deals with a disclosed deal value of $10.6 billion compared with 152 deals with $1.8 billion in 2Q17.
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