The third quarter of 2017 experienced a slowdown in Indian M&As with the deal value declining by 63.4 per cent to $ 6.8 billion in Q3 compared to S$ 18.5 billion in the corresponding period last year. The number of deals targeting India (54) was the lowest since 2009. It is also half the number in Q3 2016 (117 deals). A report by Mergermarket, an Acuris Company blames country's falling GDP growth, slowing to a three-year low of 5.7 per cent, for the slide in the M&A market. The deal count in all sectors had declined compared to last year. In telecommunications and agriculture it remained the same.
Telecom remained most active
Although there was no deal in telecommunications this quarter, it was still the most active sector in the year by deal value because of the contribution of two large deals, both valued at over $1 bn in the first half of 2017. Aircel Limited's $4.8 bn merger with Reliance Communications Limited (RCOM) lapsed on October 1 and as a result the deal value of the sector in 2016 dropped to $ 8.7bn from $ 13.6bn. Therefore, the sector saw a 70 per cent increase to $ 14.8bn in 2017 over the same period of 2016, with four deals in both years.
Going by the report data, while Indian M&A activities appear to be slowing in 2017, private equity buyouts saw 66 deals worth US$ 7.4bn in total, recording the highest deal value since 2001. In Q3 alone, 14 buyouts totalling $ 2.2bn were done in India. This was more than double the value in the same period of 2016 ($ 1.04bn), despite the deal count dropping.
Real estate was the most targeted sector by value with 4 deals valued at $ 1.8bn in YTD (year to date) 2017, largely due to the Singapore sovereign wealth fund GIC Private Limited's $ 1.34bn acquisition of a 33.34 per cent stake in commercial properties developer DLF Cyber City Developers in August. Nonetheless, according to the report, such a trend is not likely to continue in the next quarter considering the economic slowdown in India. The financial services sector continued to be an attractive sector to PE firms, with 15 deals worth US$ 1.4bn during the January-September period. It saw an increase of 17 per cent by value compared to YTD 2016 with same number of deals (15 deals, $ 1.2bn).
Goldman Sachs topped India Financial Advisor League Table by value of $ 16.9bn across 5 deals. Ernst & Young has finished first by deal count working on 22 deals worth a total US$ 3.4bn. The firm is the only financial advisor to work on more than 10 deals in 2017.