Inbound mergers and acquisitions fall 7% to $73.6 billion in 2020: Report

Despite Reliance Group closing a slew of equity divestments in its telecom and retail arms to the tune of USD 23 billion in 2020, the overall inbound M&As failed to notch up the 2019 tally with the value falling 7 per cent to USD 73.6 billion last year, according to a report.

Last year, outbound M&As touched USD 4.4 billion, up 58.4 per cent compared to 2019 and over 80 per cent of the money landed in US assets, according to a tally of Mergers & Acquisitions (M&As) by global financial markets data provider Refinitiv.

Overall inbound deals faltered due to the pandemic, pulling down the deal value by 7 per cent and down 11.5 per cent in volume over 2019.

With USD 73.6 billion worth inbound deals, M&A value last year was way below the all-time high it scaled in 2018 at USD 132.2 billion and up from 2017 when it was at a low USD 58.3 billion, according to Elaine Tan, a senior analyst at Refinitiv.

The numbers would have been much lower had it not been for the litany of deals by Reliance -- USD 16 billion into Jio and over USD6.4 billion into Reliance Retail.

However, domestic M&As dropped 12.4 per cent in value to USD 36.8 billion while the number of announced domestic deals fell 11.5 per cent from 2019.

The biggest deal was by Facebook acquiring 9.9 per cent stake in Jio Platforms for USD 5.7 billion through its subsidiary Jaadhu Holdings. During the third quarter, Google International also acquired 7.73 per cent stake in Jio for USD 4.5 billion.

Thanks to the big deals by Reliance with Facebook and Google, the US was the most active foreign asset acquiror in terms of value and volume. While value doubled to USD 19.1 billion from 147 deals, it captured 51.9 per cent of the inbound M&A market share.

In 2020, outbound M&As totalled USD 4.4 billion, up 58.4 per cent from 2019. And again, the US was the topmost target-nation in terms of value and volume across 43 deals worth USD 3.5 billion, which is 79.7 per cent of the total deals.

Last year, majority of deal making targeted energy and power sector which totalled USD 13.1 billion, up 15.7 per cent from 2019 and 15.8 per cent of the deal share, followed by telecoms and financials with 13.1 per cent and 11.8 per cent market shares, respectively.

The numbers would have been still lower had it not been for a 3.6 per cent uptick in number of deals in the second half, Tan said.

Meanwhile, equity capital markets set a new record with USD 37.6 billion in proceeds, surpassing the annual record set in 2007 at USD 31.2 billion as follow-on offerings hit all-time high and IPOs picked up in the second half.