January has seen the return of mergers and acquisitions (M&A) and private equity deals, but deal sizes have fallen, indicating that the action on deals is restricted more to the middle-markets than larger ones. But the good news is the number of deals is significantly higher, indicating there is enough activity going on in that space.
There were 91 M&A and PE deals in January, valued at $1.99 billion, up in number from 68 deals in January 2011, but that year, the total value was higher at $3.03 billion, the latest edition of Grant Thornton's Dealtracker says. In January 2010, there were 86 deals totalling $3.9 billion.
Says Harish HV, partner, India Leadership Team at Grant Thornton India: "January has brought in the new year which we are calling the Year of M&A with a spurt in volume of transactions from 68 to 91. We are also seeing a spurt in PE (private equity) activity with 34 transactions compared to 19 the previous year. Volumes have fallen, which essentially means in both these segments, the average volume of transactions has gone down.
"Essentially, the mid-market seems to be more active in both the segments and big deals are yet to be seen. There was no deal larger than $0.5 billion in M&A this month. On the PE side, five out of 34 transactions accounted for 68 percent, and we are seeing a spurt in smaller investment deals which are typically more of venture type deals."
The total value of outbound deals (Indian companies acquiring foreign ones) fell sharply to $.03 billion (with 12 deals), down from $0.94 billion in January 2011 (14 deals) and $0.41 billion (14 deals) in January 2010.
By contrast, the total value of inbound deals was higher in January at $0.81 billion (13 deals), compared to $0.14 billion (8 deals) in the same period last year, and $0.04 billion (9 deals) in January 2010.
There were 32 domestic deals in January 2012, adding up to $0.47 billion, compared with $1.28 billion (27 deals) and $2.34 billion (35 deals) in January 2011 and January 2010, respectively.
PE deal values totalled $0.68 billion (34 deals) in January this year, compared to an identical amount in the same month last year but with just 19 deals. The figure was $0.63 billion with 24 deals in January 2010.
There were no initial public offers listed in January 2012.
The top three M&A deals this month were TV18 Broadcast's acquisition of Eenadu Television Network ($395 million), Watson Pharma's acquisition of 94 per cent in Ascent Pharmahealth for $393 million and Nippon Life's 26 per cent acquisition of Reliance Capital for $290 million, Dealtracker said.
Among private equity deals, Temasek's 5 percent acquisition of Godrej Consumer Products for $137 million, General Atlantic's acquisition of Fourcee Infrastructure for $125 million and Olympus Capital's $100 million acquisition in DM Healthcare were listed as the top three deals.