India’s merger and acquisitions deal volume rose 19% to 273 deals year-on-year in the second quarter of 2018, while the disclosed value increased 6.8 times to $34.8 billion from $5.1 billion during the same period of the previous year, according to EY, an advisory services firm.
“This difference can mainly be attributed to the six big-ticket deals [of more than $1 billion] in 2018. The biggest deal in this quarter was the $16 billion acquisition of Flipkart by Walmart Inc., which accounted for 46% of the total disclosed deal value,” according to EY’s 30th Transaction Quarterly.
From a sectoral perspective, financial services (39 deals; $1.1 billion) recorded the highest number of deals and consumer products and retail (30 deals; $16.5 billion) dominated in terms of deal value. Telecom (two deals; $5.4 billion), diversified industrial products (23 deals; $2.9 billion) and metals and mining (6 deals; $960 million) were also in the limelight as they clocked high deal value.
“M&A activity is expected to stay positive in the coming quarters, on the back of continued interest of financial and strategic investors in the Indian market,” said Amit Khandelwal, managing partner, Transaction Advisory Services of EY. “Domestic activity should strengthen further as players across sectors look to expand scale, de-leverage balance sheets and innovate their offerings through increased usage of new technologies. The restructuring deals will remain active in the coming months as the NPAs cleaning is a high priority for banks. “Furthermore, the successful resolution of certain cases recently, with healthy recovery rates under the IBC, along with the implementation of project ‘Sashakt’, will further add to the pipeline,” Mr. Khandelwal said.
Cross-border M&A activity in 2018 was at record high as the inbound deal value reached $23.2 billion across 69 deals, on the back of the Walmart-Flipkart deal. The domestic landscape witnessed 170 deals with a disclosed deal value of $10.6 billion compared with 152 deals with $1.8 billion in 2017.
The U.S. continued to be the most active cross-border M&A partner for Indian companies during the quarter, with a total of 26 deals (18 inbound and 8 outbound deals) for a total disclosed value of $16.6 billion. Japan, the U.K., and the Netherlands emerged as other key partners with investments across sectors. “The transition of India’s economy towards a formal structure, coupled with healthy deal market fundamentals and the authority’s commitment to the IBC, should support the deal-making in the short-term,” according to the report.