At $30.3 bn, M&As hit four-year high in March quarter

The US was the most active foreign acquirer with $8.2 billion worth of deals, up 39% a year ago and accounted for 70% of market share in inbound M&As

Mergers & acquisitions started off on a strong footing, hitting a four-year high at USD 30.3 billion in the first quarter of 2022, bucking the global trend where deal-making fell sharply, says a report.

Deal activity grew by 5.6 per cent in value terms in January-March 2022 compared to the first quarter of 2021, making it the highest first-quarter period since 2018 when it was USD 31.1 billion.

In volume terms, the M&A activity grew 29.6 per cent in the first quarter of 2022, making it the best-ever quarterly number, according to the M&A numbers collated by Refinitiv, an LSEG business, which is among the world's largest providers of financial markets data and infrastructure.

 

M&As involving domestic companies stood at USD 23.7 billion, down 8.3 per cent on year. Domestic M&As declined 24.5 per cent to USD 12.1 billion, and inbound M&As grew by 17.9 per cent to USD 11.6 billion, which is the highest first-quarter period since 2017.

The US was the most active foreign acquirer with USD 8.2 billion worth of deals, up 39 per cent a year ago and accounted for 70 per cent of market share in inbound M&As.

Outbound deals more than doubled to USD 5 billion, making it the highest first-quarter period since 2010. Again, the US was the most targeted nation in terms of value from domestic companies with 21 deals worth USD 3.9 billion, and a 77 per cent market share.

Biocon's acquisition of the biosimilars business of the US-based Viatris Inc for USD 3.335 billion is the biggest deal so far this year and the largest-ever Indian outbound acquisition in US healthcare. The majority of the deals targeted the high technology sector by value and number of deals which totalled USD 6.6 billion, double the amount from a year ago and captured 21.8 per cent market share.

Healthcare captured a 15.5 per cent market share and grew four times in value to USD 4.7 billion followed by financials at 13.5 per cent market share with USD4.1 billion, down 41.3 per cent.

Elaine Tan, a senior analyst at Refinitiv, said while global deal-making fell to its lowest since 2020, Indian M&As had a strong start in the first quarter period reaching a four-year high.

Acquisitions in technology and healthcare, availability of private equity and abundant cash reserves and historically low-interest rates, were key factors pushing M&A growth so far this year.

Private equity deals also kicked off at a record pace and amounted to USD9.8 billion, with high technology sectors capturing 28.7 per cent market share.

But equity capital market (ECM) activity fell 64.3 per cent, making it the lowest start to a year since 2019, as the number of ECM offerings fell 23.3 per cent. In line with the global trend, domestic IPO activity also declined 57.1 per cent and the number of IPOs fell 14.8 per cent on year.

The poor ECM show had investment banking fees falling by 33.5 per cent to USD 179.7 million in Q1, making it the lowest first-quarter period since 2016. ECM underwriting fees fell 43.2 per cent to USD 40.9 million, while DCM (debt capital market) underwriting fees fell 23.9 per cent to USD 49.1 million, the slowest start to a year since 2016.

Completed M&A advisory fees fell 17.9 per cent to USD62.2 million and syndicated lending fees plunged 52.5 per cent to USD27.4 million.

India equity capital markets (ECM) raised USD3.1 billion in Q1, down 64.3 per cent, the slowest start to a year since 2019, as the number of ECM offerings fell 23.3 per cent.

Follow-on offerings, which accounted for 67 per cent of overall ECM proceeds, raised USD2.1 billion, down 64.9 per cent in value and 25.8 per cent in volume.

IPOs saw a slow start and raised USD 1 billion in Q1, down 57.1 per cent, and is the lowest first quarter since 2019, while the number of IPOs fell 14.8 per cent. Adani Wilmar's IPO was the largest so far this year, raising Rs 3,610 crore in January.

Primary bond offerings worth USD 18.3 billion, were 25.7 per cent lower, making it the lowest period since 2016 when it was USD 9.9 billion. Reliance Industries launched a USD 4 billion bond offering, the largest-ever US-dollar bond issuance from the country.