As expected, February saw a healthy upswing in mergers and acquisitions, with a total of $15.4 billion worth of M&A deals taking place. As many as 94 deals took place in the month, compared with a much lower 74 deals totalling $8.24 billion in the same month last year.
The total M&A (mergers and acquisitions) and PE (private equity) activity on a year-to-date basis stood at $17.4 billion.
In its monthly update, Grant Thornton’s Dealtracker says Sterlite’s $11 billion deal with Sesa Goa accounted for as much as 81 percent of the total deal value for the month, while Piramal’s $618 million acquisition of a 6 percent stake in Vodafone’s Indian operations from Essar Teleholdings came in at number two.
February saw 44 private equity deals totalling $670 million, compared with 28 deals totalling $390 million a year ago. Among top deals in the PE space were Accel Partners’ and Tiger Global’s $150 million investment in online retailer Flipkart, and Warburg Pincus’s $50 million investment in AU Financiers.
Significantly, the initial public offers (IPO) market continues to languish, with just $1.2 billion raised between January and December 2011 via 30 IPOs. The total value of outbound deals – Indian firms acquiring companies overseas – stood at $440 million (through just five deals) in February, compared with $210 million through 11 deals the previous year.
Says Harish HV, partner, India Leadership Team at Grant Thornton: “We have seen a significant jump in overall transaction values in the month due to the announcement of a large restructuring deal by Vedanta Group for $17.4 billion, which is the highest in the past three years, and also the month of February has seen the highest in the last three years in terms of deal values.”
“Inbound continues to surge in comparison with outbound though we are seeing an increased interest from corporates in outbound in the recent two months. PE continues to grow with 78 transactions valued at $1.3 billion, pointing to a larger growth in VC deals, which augurs well for creating more entrepreneurs and business. The recent changes in the Competition Commission guidelines and the activity in the first two month augurs well for our forecast of this being a ‘Year of M&As’ for India Inc.,” he adds.
In the PE space, the IT and ITeS sector continued to dominate the deal space, with seven deals totalling $218 million, accounting for 32 percent of the value of sector deals in February. Banking and financial services came in second, accounting for 24 percent ($160.32 million), while the beleaguered realty sector still managed to reach third position, finishing at $79 million with five deals.
Power and energy, and pharma and biotech were the other two leading sectors in the PE space.