mergermarket, the independent Mergers and Acquisitions (M&A) intelligence service, today releases its India M&A 2011 year-end report. Although M&A activity saw a substantial drop last year, private equity acquisitions by US bidders leaped compared to 2010.
A total of 244 M&A transactions with an accumulated value of US$ 29.2 billion were recorded for 2011. This represents a 17% drop compared to the 294 deals announced in 2010, and a y-o-y drop of 43.7% in deal value. In the midst of the global market instability, inbound M&A activity in 2011 remained at a similar level in comparison to 2010 with a total deal value of US$ 24.8 billion whilst outbound deals slumped by 70.9% to US$ 6.5 billion.
“Despite the downward M&A trend seen by India in 2011, an uptick can be expected in 2012 despite the ongoing Eurozone woes,” said Anjali Naik, Editor, mergermarket, Asia Pacific. “This will be spurred by reduced inflation and lowered interest rates at home while the cautiously improving US economy bodes well in terms of inbound American-interest from cash-rich companies. While natural resource deals will continue to dominate the scene, albeit on a smaller scale, ongoing activity is expected to pick up in the mid-market Industrials & Chemicals, Technology and Leisure sectors. In fact, the Leisure sector saw the biggest mid-market increase globally, according to data by mergermarket.”
US private equity-backed buyouts in India surged from US$ 1.16 billion in 2010 to US$ 2.01 billion in 2011. Looking at the total deal value in 2011, US PE firms slowed down their pace in acquiring Asia-Pacific businesses except those in India. US PE buyers’ strong interest in India is clearly demonstrated by the fact that buyouts by US PE firms in India surged by 73% compared to 2010, whilst buyouts in the rest of Asia-Pacific fell by a significant 31.7%.
Despite the mild drop in deal count, India’s Energy, Mining and Utilities sector was the most active in M&A last year. A total of US$8.14 worth of deals were announced in the sector in 2011, accounting for approximately 27.9% of the country’s total deal value of the year. The Telecommunications sector, a sector that was most active in 2010 and second most active in 2009, saw a substantial 70.5% fall in deal value in 2011. Based on mergermarket’s proprietary intelligence database, the Industrials & Chemicals sector in India will see the highest number of transactions in 2012, whilst M&A activity in the Energy, Mining and Utilities will remain adequate.
Due to the overall drop in deals in the country, leaders on the financial advisor league tables recorded fall in deal volume and value. Morgan Stanley (US$ 14.5 billion) and Ernst & Young (14 deals) topped the rankings by deal value and volume, respectively. Meanwhile, AZB & Partners, advising on US$ 11.3 billion of deals and Desai & Diwanji, which advised on 48 transactions throughout the year, ranked top of the legal advisor league tables by deal value and volume, respectively.
