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M&A activity remains resilient in India, despite year of economic uncertainty

Merger and acquisition (M&A) activity in the Indian market continued at pace in 2013, despite ongoing uncertainty over the country's wider economic prospects; according to analysis from business and financial advisers Grant Thornton UK LLP.

Overall, 500 publically announced M&A deals were recorded in 2013, amounting to US$28.19 billion in transactions. Although representing a 16% year-on-year drop in volume and 20% year-on-year decline in total value of deals, the analysis suggests that investor's interest in India remains relatively stable in light of ongoing economic pressures which have seen inflation rate rises and a depreciating rupee over the past 12 months.

Five M&A deals valued at over one billion US dollars each were witnessed in 2013, compared with four such deals in 2012; although still a sharp drop from the 10 deals of this calibre recorded in 2011. Excluding 2012's blockbuster Vedanta Group restructuring deal (valued at US$12 billion), the value of M&A in 2013 represents a 15% year-on-year increase.

Private equity (PE) deals in 2013 saw steady improvement, with a 12% year-on-year increase in deal volumes (totalling 450) and a 40% year-on-year rise in total deal value (reaching US$10.39 billion). Top sectors for PE investment included: IT & ITES (20%), Pharma, Healthcare & Biotech (14%), Real Estate (13%), Telecoms (12%), Banking (11%) and Automotive (8%). There were 23 private equity investments over the year with recorded values of over US$100 million each.

Anuj Chande, Partner and Head of the South Asia Group at Grant Thornton UK LLP, commented: "Despite an overall mixed year in 2013, the Indian economy still retains pockets of competitiveness; particularly in sectors such as the pharmaceutical and aviation industries, which will likely see M&A activity increase in 2014 as the commercial and regulatory environments in India play strongly in their favour.

"Though not a blockbuster year, 2013 proved to be fairly resilient despite political and fiscal uncertainties in India. The gradual stabilisation of the rupee and key stock indices in the second half of the year offer promising signs, and we're hopeful this cautiously positive sentiment will lead to a resurgence in M&A activity following the 2014 elections. India – corporate and otherwise – is bracing itself, while looking ahead!"

 

Table I: Deal summary for Indian M&A and PE activity for 2011 – 2013.

Deal Summary

Volume

Value (US$ bn)

 

2011

2012

2013

2011

2012

2013

Domestic

216

234

220

5.04

6.08

5.75

Cross Border

288

262

221

39.58

14.51

17.89

Mergers & Internal Restructuring

140

102

59

-

14.80

4.55

Total M&A

644

598

500

44.61

35.38

28.19

PE

373

401

450

8.75

7.38

10.39

Grand Total

1,017

999

950

53.36

42.76

38.58

Cross Border includes:

 

 

 

 

 

 

Inbound

142

140

139

28.73

5.96

8.64

Outbound

146

122

82

10.84

8.55

9.25