Deal activity in the first quarter of this year has left the investor fraternity a happy lot. As many as 409 deals were closed between January and March this year in the backdrop of significant pick up in both M&A and PE activity, as per data available with Grant Thornton. In 2015, as many as 352 transactions were sealed, while in 2014 the number stood at a mere 257.
In terms of value, transactions witnessed almost a 27 per cent jump to $11,884 million from the corresponding period last year. Several big ticket transactions – those over $100 million - this year that led to the increase in deal value.
“Primary drivers for M&A growth was the strong outbound interest,” said Prashant Mehra, Partner at Grant Thornton. Outbound deals refer to transactions where Indian companies acquire foreign firms. In the first quarter of this year, the value of outbound transactions witnessed more than four times jump from the same period last year demonstrating revived business sentiments. Outbound deal value in the first quarter of 2016 stood at $2,406 million, while in the first quarter of 2015, it stood at $569 million. Inbound transactions, on the other hand - where foreign companies acquire stakes in Indian firms - continued to witness action like last year.
On the M&A front, core sectors such as telecom, energy and automotive attracted big ticket transactions accounting for significant deal values. Against this, IT and banking sector topped in terms of volume of transactions. PE/VC investments, on the other hand, were led by increased investor interest in E-commerce and consumer technology sectors.
Going forward, experts say the deal momentum will continue and outbound transactions may witness significant action as valuations of companies across the world have witnessed a correction. In terms of PE activity, however, experts say that there may be a slight blip as deals in the startup sector may undergo a temporary blip as investors may adopt a wait and watch policy after infusing significant amount of capital last year.
All in all, however, sentiments remain positive. Easing FDI norms, regulations in cross border transactions apart from implementation of other key government initiatives will hopefully continue to drive business sentiment and maintain this deal momentum throughout 2016.
BW Reporters
Over 14 years in journalism, I cover corporate sectors and write on M&A, private equity, venture capital and healthcare. I also play the role of an editorial lead for proprietary events like BW Healthcare Awards and BW Young Entrepreneur Awards. I am also a guest faculty at The Indian Institute of Mass Communication (Dhenkenal). Prior to BW Businessworld, I have had stints with Forbes India, The Economic Times, India Today and The Indian Express. When not working, I love travelling and discovering new places - soaking in new culture, food and people. I also like to spend time with my fawn Labrador.
