M&A Deals Highest In 2017 After 2010
Financial year 2017 recorded the highest number mergers and acquisition deals in India. The year 2017 with 1,022 deals with a disclosed value of $46.8 billion. The deal volume reached a record high (as compared to 895 deals in 2016) since 2010. However, the total deal value was lower by 12 per cent from $53.2 billion in the previous year, according to global consultant EY's latest Transactions Annual report released on Thursday (22 March).
The report claimed that the primary deal drivers for the year were aimed at market expansion and entry into new markets, digital disruption and sector convergence.
"India recorded a healthy M&A activity in calendar year 2017. While there was an increase in the number of deals, they were concentrated in the lower bands (around $20 million), said Amit Khandelwal, Partner and National Leader, Transaction Advisory Services, EY.
In the year under review, big ticket deals were fewer in number, compared with 2016, as corporates held back from venturing into big ticket acquisitions. In addition, the timeline of some of the big-ticket deals got stretched due to increased scrutiny by the regulators and complex deal structures, the EY report said.
Domestic deals continued to dominate the Indian M&A landscape as home-grown companies' preferred the inorganic route to achieve growth. In terms of volume, the year saw 682 deals constituting around 67 per cent of the total deal volume. The domestic deal value stood at $37.9 billion, accounting for more than three-fourth of the total disclosed value, a first-time phenomenon ever in the Indian M&A deal market. Interestingly, 127 deals (totalling $10 billion) out of the total domestic deals were related to restructuring, constituting around 19% of the domestic deal volume and 27 per cent of the deal value. The local M&A market saw three billion-dollar-plus such deals during the year, totalling $5.3 billion.
The year saw 340 cross-border deals with a cumulative disclosed deal value of $8.9 billion. This translates into a 7 per cent decline, in terms of deal volume, compared with 2016, while cumulative deal value slumped by nearly 71 per cent over the same period. A total of 203 inbound deals took place in 2017 with a cumulative disclosed deal value of $6.5 billion.
While the deal volume remained flat, the deal value witnessed a decline of 69 per cent year-on-year, from $21 billion, partially due to a higher base in 2016. On the outbound front, the year recorded 137 deals with a cumulative disclosed deal value of $2.4 billion, registering a fall of 16 per cent year-on-year in deal volume, from 163 deals, and 76 per cent in disclosed value, from $9.6 billion. Country wise, the US continued to be the most active cross-border partner, followed by Singapore and Japan.
