M&A deal value grows three-fold in August: Grant Thornton report

But PE investments continued to decline for the third month in a row both in terms of volumes and values

Overall deal activity in 2016 till date has remained steady, with strong growth in mergers and acquisitions (M&A) driving a six per cent rise in value over a year before; private equity (PE) investments sustained the deal volumes.

According to Grant Thornton’s Monthly Dealtracker report for August, six deals in the billion dollar club and seven over $500 million each contributed to 60 per cent of M&A deal values, year to date (YTD). However, PE investments have dipped 30 per cent in investment values.

The number of deals overall was 1,017, down two per cent from 1,038 over the same period last year. In terms of value, there's a growth of six per cent to $30.45 bn, compared to $28.6 bn in the same period last year.

YTD, the M&A deals saw a three per cent drop in volume to 351, from 361 last year. In value, up 31 per cent to $22.4 bn as against $17.1 bn last year. PE investments fell 30 per cent in value to $8.06 bn in 666 deals, against $11.5 bn in 677 deals last year.

This year has seen 17 investments valued above $100 mn, as compared to 38 in 2015, added the report.

August saw transactions worth $3.6 bn (134 deals), up 38 per cent over a year in value, compared to $2.6 bn in 2015; volumes declined by eight per cent. There were eight deals of over $100 mn each.

M&As in August saw a tripling in deal values to nearly $9 bn in 42 deals, from $2.5 bn in 49 deals. PE investments continued to decline, the third month in a row, both in terms of volumes (17 per cent over a year) at 85 deals and values (37 per cent) at almost $1.1 bn. Compared to July, there was a fall of 27 per cent in value (July saw two deals valued over a billion dollars; August had none). However, volumes remained stable.

Classified by sectors, M&A deal values were driven by banking, financial services and insurance (BFSI), apart from telecom; these two segments contributed 55 per cent.

Prashant Mehra, partner, Grant Thornton India LLP, said: “August witnessed a little over 130 deals, valued at $3.6 bn; around 40 per cent above the same month last year. On M&A, cross-border deal value increased by 45 per cent as compared to August 2015, and there was an almost three-fold increase in value in domestic M&A, which contributed over $2.5 bn." PE activity seems to have declined once again this month, both in  value and volume, he added.

The government’s push on reforms towards ease of doing business has kept the deal momentum high, said the report. "There is traction across all sectors and big-ticket deals are also taking place. Further, with the government having declared that GST (goods and services tax), banks and infrastructure are top priorities, there will be added confidence in the investor community, as these three sectors are considered the foundation of a strong, growth-oriented economy. We believe the next few quarters, especially early 2017, should see a significant surge in deal activity,” said Mehra.

Deal round up - August 2016
Deal Summary	Volume			Value (US$mn)
	2014	2015	2016	2014	2015	2016
Domestic	20	17	29	742	131	635
Cross-border	25	23	19	375	757	1098
Merger & Internal Restructuring	2	2	1	10	10	777
Total M&A	47	42	49	1,127	898	2,510
Private Equity	47	103	85	521	1720	1090
Grand Total	94	145	134	1,648	2,618	3,600
Cross-border includes
Inbound	10	14	10	244	632	860
Outbound	15	9	9	131	124	238
Source: Grant Thornton Dealtracker August 2016

Deal Summary	Volume			Value (US$mn)
	2014	2015	2016	2014	2015	2016
Domestic	157	192	209	8,551	6,149	10,914
Cross-border	184	163	130	9,832	9,639	10,119
Merger & Internal Restructuring	24	6	12	3,267	1,326	1,357
Total M&A	365	361	351	21,650	17,114	22,390
Private Equity	374	677	666	7,373	11,519	8,063
Grand Total	739	1038	1017	29,023	28,633	30,453
Cross-border includes
Inbound	113	79	60	7,842	6,648	6,731
Outbound	71	84	70	1,990	2,991	3,389
Source: Grant Thornton Dealtracker August 2016