Corporate India announced merger and acquisition (M&A) deals worth USD 1.83 billion through 37 transactions in February, registering a decline of over 32 per cent in value terms over the year-ago period, a report says.
In February 2015, there were 40 M&A deals worth USD 2.69 billion.
According to the assurance, tax and advisory firm Grant Grant Thornton, M&A deal values fell by 32 per cent year-on-year largely due to decreased cross-border activity.
There was a sharp decline in cross-border deal activity, as the month of February saw 15 such deals worth USD 539 million, while in the corresponding period last year there were 17 such transactions worth USD 1.82 billion, it said.
However, domestic deals sustained the momentum with a 49 per cent increase in deal values. There were 22 domestic transactions worth USD 1.29 billion in February this year.
From a sector trend perspective, IT & ITeS continued to be dominant by contributing 28 per cent in deal values in M&A, while manufacturing sector led the deal activity contributing 40 per cent of total deal value.
The manufacturing sector also witnessed its largest deal this month - Birla Corp's acquisition of Reliance Infra Cement which was valued at USD 710 million.
"Deal action this month seems quite subdued and is mostly attributed to the much awaited budget. Although the budget seems well balanced for the overall growth of the country, certain aspects such as the Dividend Tax don't augur well for M&A," Grant Thornton India LLP Partner Prashant Mehra said.
He further noted that "if the thrust on implementation is as rigorous as planned, we are set for some exciting times in the deal market this year".
Some of the major deals of the month include Wipro's acquisition of HealthPlan Services for USD 460 million and RMZ Corp's acquisition of Equinox Business Park for USD 353 million, the report said.
US investors maintained their lead, investing in 58
deals worth USD 4.8 billion.
"The Government's 'Make in India' policy has created a more favourable investment environment for foreign firms, especially in manufacturing and chemicals sector," the report said.
Meanwhile, private equity (PE) buyout value rose for the third consecutive year, hitting a record USD 12.6 billion.
In terms of deal count, 90 acquisitions were made by PE last year -- second highest for a year since 117 deals in 2015.
The report found that foreign private equity houses played an increasingly important role across Indian deals as 91.8 per cent of the total USD 12.6 billion was represented by foreign PE firms, and more than seven in every 10 deals involved a foreign sponsor.
"Domestic private equity firms claimed only an 8.2 per cent market share with 21 deals," the report said adding that this is sharp decline from 38.3 per cent market share in terms of deal value in 2011.
