Corporate India's M&A overtures have remained at about the same levels as last year, despite the moderating growth and demand, high inflation and interest rates, reveals the half-yearly deal tracker report put out by advisory firm, Grant Thornton India. The total value of deals (M&A, PE and QIP) struck in the first half of 2011 was about $32.48 billion across 524 deals compared with $34.4 billion sealed across 536 transactions in the first six months of 2010.
Here are the key highlights:
Inbound rules, outbound loses fizz
Faced with slowing demand and increasing uncertainty in their home grounds, foreign companies lure for the ‘India growth story' seems to have fuelled the inbound deals. Inbound deals, over three times the value recorded in the first half of last year, also saw a healthy uptick in volumes. These deals totalled a transaction value of about $17.44 billion ($5.4 billion) across 57 deals (44 deals). Oil and gas, telecom and IT and ITES were the sectors that recorded the highest deal value share in this period. Notably, this is in stark contrast to the top three sectors of last year — pharma and healthcare, telecom and banking and financial services. British Petroleum's $7.2 billion acquisition of the oil and gas assets of Reliance Petroleum, the largest M&A deal so far this year, is an example here. There were five deals valued at over a billion dollars each transacted during the period, four of which were inbound.
Outbound deals on the contrary lost their sheen, with the first half of 2011 seeing 86 deals for a total value of about $5.89 billion as against 108 deals worth over $17.9 billion in the same period in 2010. India Inc's deal-making appetite in the home turf, however, took a slight beating, with companies striking fewer domestic deals in first half this year. Domestic deals totalled $3.41 billion across 174 deals during the six months, as against $5.59 billion deal value across 233 deals last year.
PE makes a comeback
Despite the many challenges in capital raising this year, private equity action has remained robust, what with the half year seeing 203 deals for an aggregate value of about $5.09 billion, almost twice the $2.95 billion across 125 deals transacted in the same period last year. Deal activity straddled various stages across sectors, geographies and industry segments. Earlier favourites — real estate, pharma, and telecom — too returned to the fore in addition to sunrise sectors such as clean tech and education. Top five deals made up about 35 per cent of the total PE deal value. Bain Capital's investment in the Hero Group leads the top private equity deals list.
Outlook
With the new takeover norms coming into effect, it would be interesting to see how the second half of the year pans out. While private equity deals will definitely see a heightened interest, M&A action too could get some fillip.