India Inc’s mergers and acquisitions deal value dropped by 39 per cent to $13.92 billion through 256 transactions compared to that in the same period last year.
According to audit and advisory firm Grant Thornton, the total deal tally has declined in the first six months of the last two years.
From $29.88 billion in the first half of 2011, it declined to $22.79 billion in H1 2012, dipping further to $13.92 billion in the first half of 2013.
“The moderation in growth along with some of the macro economic challenges in the Indian economy has impacted deal activity in the 1st half of 2013,” Grant Thornton India Partner, Transaction Advisory Services Raja Lahiri said.
There were four large billion dollar deals like Apollo Tyres – Copper Ties, ONGC Videsh – Rovuma Off – shore block and Qatar Endowment Fund’s investment in Bharti Airtel and Mylan Inc’s acquisition of Agila Specialities.
Notwithstanding the fact that the year began on a sluggish note, the second quarter witnessed resurgence with twice the level of M&A activity and the second half is bound to be even more interesting, the report said.
“The market for M&A is at an interesting juncture today in an economy which has seen significant battering over the past 6 months,” Grant Thornton India Partner, India Leadership Team Harish HV said.
He added, “We are seeing significant interest in consumer goods with two large global majors consummating significant investments like Unilever and Diageo, a growth in PE activity in the face of declining growth and some corporate battles for takeover.”
In terms of destination of M&A deals, United States was not only the most favoured outbound target for Indian firms, but it was also the leading country for inbound acquisitions in terms of both deal value and volume, the report said.
Going forward, the deal pipeline looks bullish for the second half as well with the Unilever stake increase in HUL underway and Jet-Etihad deal under the scanner.
“We foresee continued growth in M&As in the remaining half of 2013 with robust activity across sectors and expect continued level of deal making in the active sectors of IT/ITES, pharma and health-care, manufacturing,” the report said.
Domestic M&A stood at $3.1 billion, in line with values seen during the same period last year, while total cross-board M&A doubled in H1 2013 to reach $10.32 billion compared to $5.1 billion in H1 2012.