Higher corporate buyer activity may help investors exit in 2017

Inbound corporate acquisitions, which have seen an uptick in terms of value in the last two years, is expected to help more exits for private equity investors in 2017. The corporate buyer activity during the year has been strong and it could be a precursor to a higher activity in 2017, according to PricewaterhouseCoopers (PwC) India.
 

The total corporate inbound activity during 2015 and 2016 was at almost $13 billion, with $6 billion worth such deals reported so far this year, as compared to around $7 billion during 2015. The total amount of these deals could go higher by the time a final tabulation gets done for 2016. The inbound corporate deals were around $4.5 billion during 2014, said an expert.

"India has been a bright spot amongst the emerging markets over the last year or so with near 7.5% growth rates. With liberalisation in FDI rules in key sectors and efforts to make India an easier place to do business, the Government has also been focussed on attracting long term foreign capital and this had been starting to show results" said Sanjeev Krishan, leader, Private Equity and Transaction Services, PwC India.

This will also help provide an exit route for the private equity investors. While 2016 saw exits worth $7.2 billion across 198 deals, of which over 42 per cent was contributed by strategic sales.

The inbound deals for 2016 was led by the acquisition of Gland Pharma by Shanghai Fosun Pharmaceutical Group for a deal value of $1.26 billion. According to data available, based on the deals for which value has been disclosed, this is the largest inbound corporate deal from 2014, while the second largest deal during this period would be $1.67 billion acquisition of Viom Networks Ltd by American Tower Corporation, reported in October 2015.

The other top inbound corporate deals include the acquisition of Bharti Telecom Ltd by Singapore Telecommunications ($657 million), acquisition of Claris Injectables Ltd by Baxter International Inc ($625 million), Tata Communications by STT GDC Ptd Ltd ($470.4 million) and Minacs Pvt Ltd by Synnex Corporation ($420 million).

However, the data shows that in terms of number of inbound deals, it has seen a decline from 2014 during the consecutive years. In 2014, there were around 164 deals reported, which has come down to around 148 in 2015 and around 125 in 2016.