M&A deal value up 12 per cent in first half of 2016

Mergers & acquisitions (M&As) in India witnessed a 12 per cent year-on-year increase in value at $15.7 billion in the first half (H1) of calendar year 2016. This is despite volumes declining by 5 per cent as compared to the first half of 2015, according to Grant Thornton, an assurance, tax and advisory firm. Outbound deal values increased 2.4 times compared to H1 2015, indicating strong domestic investor optimism in the global market. Domestic M&A space witnessed significant consolidation among start-ups which contributed to 25 per cent of total volumes.

Including private equity deals, H1 2016 saw deals worth $ 21.8 bn (750 deals), as against $ 21.1 bn (738 deals) in H1 2015. Key growth drivers for the deal activity continued to be domestic and outbound transactions.

Private equity (PE) deals have seen consistent growth in investment volumes as compared H1 2015, as 491 deals worth US$ 6.1 bn were executed in H1 2016. However, investment values declined by 13 per cent y-o-y, on account of reducing average ticket size along with early stage funding rounds dominating the investments, resulting in the shortfall of big ticket investments as over 90 per cent of them were venture capital investments. The year saw one billion dollar deal and 12 deals valued over $100 mn each.

Sectors that have seen the most M&A activity include the core sectors such as energy & natural resources, manufacturing and IT & ITeS that continue to dominate the M&A deals space, together accounting for 58 per cent for total M&A values. In volume terms start-ups, IT & ITeS and Pharma led the deals in M&A space. The top PE sectors include IT & ITES (22 per cent) which continues to be a sector of interest followed by start-ups (20 per cent), and banking and financial services(13 per cent) in terms of deal values.

H1 2016  has seen 11 initial public offers (IPOs) worth $ 1.1 bn, marking highest ever IPO raised in the period of Jan-Jun since 2010, which garnered $ 2.3 bn (from 27 IPOs).