Corporate India's M&A deal value at $5 bn in 2010: survey

Corporate India's appetite for growth through inorganic mode has resurfaced with mergers and acquisitions (M&A) deal value in the month of November nearing $5 billion -- over three times increase over last year, says a survey.

According to data compiled by research firm VCCEdge, the M&A deal value in November this year nearly trebled to $4.9 billion from $1.7 billion over the same period last year.

On month-on-month basis, the November M&A deal volume represents a jump of over five times.

There were M&A deals worth about $16 billion in 2009, while in the year 2008, it stood at a whopping $40 billion.

The uptrend in the deal volume is reflected in the number of transactions as well, with deal count witnessing an upward trend with 59 deals against 41 recorded in the period under consideration last year.

November 2010 has seen the fourth highest monthly M&A deal value over the last twelve months.

Deal valuations witnessed a revival in line with the overall economy, as the average deal amount went up from $74 million in November 2009 to $151 million in November 2010, VCCEdge said in its monthly deal report.

A sector-wise analysis shows that in the period under review utilities and consumer discretionary were the most targeted sectors with deals worth $1.38 billion and $1.27 billion, respectively. They accounted for 53 per cent of total M&A deal value during the month.

Other sectors, which contributed significantly to the deal value were energy ($564 million), financials, ($561 million) and materials ($507 million).

In terms of number of deals, consumer discretionary and information technology turned out to be the most active sectors with 11 and 10 deals respectively, followed by industrials with eight deals and financials and consumer staples with seven deals each.

The largest deal in November 2010 was China Huaneng Corp's acquisition of United States-based IntergenInc from GMR Infrastructure. GMR Group acquired 50 per cent stake in Intergen for $1.354 million in October 2008.

This was followed by Sahara India's acquisition of 100 per cent stake in Grosvenor House for around $757 million. The other top deal of the month was Essar Group's acquisition of 60 per cent stake in Zimbabwe Iron & Steel for a price of $500 million.

The top five M&A deals accounted for 68 per cent of total M&A deal value in November 2010, the report added.