Merger and Acquisition fall by 9% to $1.9 billion in May

Corporate India's merger and acquisition activity moderated in May as deals worth $1.9 billion were announced, registering a decline of 9% from last year, says a Grant Thornton report.

According to the global tax, audit and assurance firm, there were 37 M&A deals worth $1,861 million in May while in the same period last year there were 47 deals worth $2,046 million.

In terms of number of deals also there was a decline of 21% over the corresponding period last year.

"M&A contribution has come in primarily from inbound deal activity, which contributed $1.1 billion to deal values, while outbound activity seems to have declined significantly," Prashant Mehra — Partner at Grant Thornton India said.

 

A sector wise analysis shows IT&ITeS along with startups and e-commerce segments have ruled the sector trends this month contributing almost 45% to the total deal values.

"Increasing consolidation is driving deal volumes in the startup sector with the month also witnessing some big ticket deals in sectors such as IT&ITeS and banking and financial services," the report said.

Energy and natural resources is the other dominant sector which contributed another 40% to total deal values.

Large transactions such as JSW Energy's acquisition of Jindal Steel and Power's 1,000 mw power plant in Chhattisgarh for $606 million and Tenaga Nasional Berhad's acquisition of GMR Energy for $300 million drove transaction values in this sector.

Going forward, Mehra said "on M&A side focus will again be limited to domestic M&A activities. The ongoing banking reforms around debt consolidation and restructuring will further boost the deal activity through availability of debt for organic growth. Thus, internal accruals would finance inorganic growth.