The volume of merger and acquisition (M&A) deals by India Inc slumped by 41 per cent to $3.3 billion in the June quarter over the previous three-month period due to the impact of the global economic slowdown, a report by consultancy firm Ernst & Young has said.
For the second quarter ending June 2009, the total disclosed announced M&A deal valuation stood at $3.3 billion, a decline of 41 per cent from $5.6 billion in the first quarter of 2009, the report said.
"Though transactions activity did not witness any considerable increase when compared with the last quarter, there is an air of hope that puts India Inc's transactions outlook back on the revival mode, albeit at a gradual pace," it said.
The expectations from the new government coupled with gains in the Indian capital market have improved investor sentiment, it added.
On year-on-year basis, the transaction value declined 80 per cent from $16.5 billion in the Q2 of 2008.
Although, the outlook remains bright for the rest of the year, financing conditions still remains under pressure as companies are trying to bolster their liquidity position, the report said.
"Companies are expected to look at smaller deals to enhance their competitiveness and not chase bulge-bracket deals like last year. The appetite for deals is surely heading north, but credit conditions still remain challenging," E&Y said.
