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M&A deals more than halve to $41.6 bn in January-June
November, 29th 2019

Overall mergers and acquisitions (M&A) in India, which hit a record high in the first half of 2018, more than halved to $41.6 billion in the first half of 2019 as both domestic and cross border deals declined, according to Refinitiv, a financial market data provider owned by Blackstone and Thomson Reuters.

Cross-border M&A deals witnessed a steep fall with a slowdown in inbound M&A transactions, which recorded a 64.5% fall to $14.3 billion in the first six months of the calendar year, compared to the corresponding period last year.

Most investments that flowed into India came from the US, which alone accounted for 26.3% of all inbound deals, followed by Japan, which stood at 12.3%, and China at 10.5%.

Indian corporates bought fewer foreign companies, leading to outbound M&A deals declining 42.6% to $1.7 billion in H1. The US remained the top market in terms of value as well as number of acquisitions from Indian companies, with 26 deals worth $665.4 million, representing a 39.7% market share.

Domestic M&A activity, too, saw a steep decline of 42.1% in value to $24 billion, compared to the first half of 2018.

Deal activity in the financial space was the highest with a market share of 33%. The total M&A deal value in the financial sector stood at $13.7 billion, up 7.2% from the year-ago period. This was followed by energy and power, which had a 13.5% market share worth $5.6 billion, but witnessed a 54.5% decline in value compared to the first half of 2018. Technology was among the top three sectors with a 12.7% market share in M&A deals, worth $5.3 billion, up more than two-fold from the year earlier.

In the financials space, the top two deals include Bandhan Bank Ltd’s pending merger with Gruh Finance Ltd for $3.2 billion in a stock swap transaction. This is also the largest-ever transaction involving India in the financial sector, Refinitiv said.

Power Finance Corp. Ltd’s acquisition of a majority stake in Rural Electrification Corp. Ltd from the government of India for $2.1 billion was the second highest deal announced in the first half of 2019.

The Indian M&A league table was topped by investment banking firm JM Financial Group with a 9% market share amounting to $3.8 billion in related deal value, according to Refinitiv. Kotak Mahindra Bank Ltd came a close second with an 8% market share, followed by Ambit Corporate with 6.2%.

While the M&A space showed a slowdown, primary bond offerings from Indian issuers hit a record high at $45.4 billion in the first half of 2019, making it the strongest semi-annual period on record. The increase in bond offerings was largely dominated by the financial sector, which held 66% of the market share amounting to $30 billion, from $17.8 billion during the same period last year.

State Bank of India launched the largest bond issuance from an Indian issuer so far this year, amounting to $1.2 billion, through its London branch. Vedanta Resources also sold a $1 billion dual-tranche high yield bond.

The equity capital markets also soared to a four-year high with companies raising $13.2 billion so far this year, showing an increase of 28.7% in proceeds from the comparable period in 2018, and the highest first half period since 2015 ($13.7 billion).

This was mainly on the back of higher follow-on offerings, which accounted for 88.8% of India’s overall equity capital market’s proceeds, growing 76% from a year ago to $11.7 billion so far this year, the highest first half period since 2015. This was driven by the rights offering by Indian companies to raise $7.2 billion till date, and accounted for 61% of India’s equity capital markets proceeds. India’s biggest rights offering on record was Vodafone Idea’s $3.6 billion and Bharti Airtel’s $3.5 billion transactions.

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