India's July M&A value fell 52.7% yoy to $4.3bn on core sector slowdown, global trade tensions: Report

Headwinds seen in the financial services space and a slowdown in the core sectors have affected the M&A deal space.

Aug 20, 2019 09:08 IST India Infoline News Service

India recorded 39 Merger & Acquisition (M&A) deals worth $4.3bn in July 2019, an 2.3 times increase in deal value MoM, but 13% short in deal volume, compared with June 2019.

However, compared with July 2018, the reporting period recorded a decline of over 52% in value and a dip in volume terms as well, according to a Grant Thornton report.

The rise from the previous month (June 2019) demonstrated a revival in deal sentiment among the deal makers, while subdued global growth, continued Brexit-related uncertainty and rising geopolitical tensions roiling energy prices, affected overall deal sentiment, it said.

Of the 39 M&A deals, one deal was in the billion-dollar club and five were valued at over $100mn each.

“M&A transactions continued to witness lacklustre deal activity on the back of failing to record big ticket deals witnessed during July 2018. In addition, headwinds seen in the financial services space and a slowdown in the core sectors have affected the M&A deal space. However, the Budget emphasis on liquidity concerns in the NBFC sector, and constant efforts to streamline the Insolvency and Bankruptcy Code (IBC) norm, among others, are likely to boost M&A deal activity,” said Pankaj Chopda, Director at Grant Thornton India.

“Though the Budget has laid down a roadmap for growing the economy in a sustained manner, with a focus on both the urban and rural sectors, the impact on deal activity will depend on the measures and policies of the government to counter the slowdown, implement and promote growth-focused investment plans and the impact of global economic trends,” he added.

M&A activities during the year-to-date (YTD 2019) fell short of recording marquee deals witnessed in 2018 that saw 12 billion dollar deals, compared to only four witnessed this year.

The start-up sector not only led the pack for M&A, both in terms of deal values and volumes, but also recorded the highest monthly values till date, driven by Oyo Rooms’ $2bn stake acquisition.

However, barring this deal, the sector also marks the highest monthly values recorded till date.

The retail, fin-tech, and gaming segments also remained active during the month. The month also witnessed deals pushed by IBC in the pharma sector, with Dhanuka Laboratories-Orchid Pharma’s $162-million deal and others in the pipeline across the retail sector with the Patanjali-Soya Ruchi deal, and the manufacturing sector with the Asian Colour-JSW Steel deal.

While the IT, pharma and banking sectors remained active with 15 deals together, the infrastructure, energy and e-commerce sectors scooped big ticket transactions of over $100mn.

Source: Media Reports, Grant Thornton Research


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