 "Deal volumes during January rise by 18% in India: Report")
Overall deal volumes in India rose by around 18% to 141 deals in January 2016 from 119 deals a year ago. However, the value of deals has come down by around 36.18% during the same period.
The number of deals rose, driven by a considerable growth in private equity investments and a marginal growth in domestic M&A transactions.
According to Grant Thornton's Dealtracker report, number of deals rose to 141 in January 2015 from 119 in January 2014 and 87 in January 2013.
Domestic deals rose to 22 (worth $364 million) in January 2016 from 18 (worth $110 million) in 2015.
Prashant Mehra — Partner at Grant Thornton India LLP said that e-commerce was driving PE investments.
“The year has commenced on a rather subdued note with total deals of around $3 billion as compared to $ 4.5 billion in January 2015. This de-growth is primarily on account of the Centerbridge-Suzlon's $ 1,200 million transaction and Herman-Symphony $ 780 million transaction in the same period last year. Other than this exception, deal trend seems to be at par with the previous year. As far as PE activity is concerned, even though the deal values have declined marginally, volume of transactions has increased by over 35%,” the report said.
"Despite strong PE investment momentum with volumes increasing 37% (year-on-year), value continued to remain stable due to smaller average investment sizes as compared to January 2015," according to the report.
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M&A deal volumes remain subdued (negative 8% year-on-year) and values declined by 49% (year-on-year) due to decreased cross-border activity and fewer big ticket transactions. This month witnessed only one deal valued above $500 million, as compared to three such deals in January 2015.
Overall, the deal activity in January, according to report is on the right track as compared to December 2015, witnessing a 24% month-on-month growth in values.
The telecom sector witnessed the largest deal this month, with Orange SA's acquisition of Bharti Airtel's operations in Burkina Faso and Sierra Leone valued at $ 900 million. This sector contributed around 52% of total deal value.
IT & ITeS continues to lead the M&A deal volumes contributing 45% of total deal volume. This is primarily driven by consolidation across the startups in the sectors which are acquiring other players for talent and technology.
Quikr India Pvt Ltd acquiring Commonfloor.com-Maxheap Technologies PVt for $200 million is the top deal in the IT/ITeS space.
The other top three deals in January includes Ctrip International taking minority stake in MakeMyTrip for $180 million, Cube Highways and Infrastructure Pte Ltd acquisition of Western UP Tollway for $84.46 million.
In terms of sector spread, IT & ITeS continue to trend high both in M&A, where it contributed over 20% and in PE where it contributed close to 50% in terms of deal values.
Other sectors with significant contribution were Telecom, Hospitality and Leisure in M&A and Pharma, Healthcare and Biotech in PE deals.
"With the increase in PE activity and in lieu of lack of acquisition financing in India, Domestic M&A is expected to rise on the back of pickup in alternate buy out financing by PEs. New research from Grant Thornton's International Business Report (IBR) reveals that going into 2016, India ranks No. 1 at 89% for net%age of business optimism about the economic outlook. Hopefully, this optimism along with certain key measures which the government is taking will help accelerate growth in deal activity in 2016," according to Grant Thornton.