Modest growth in M&A activity, PE deals surge in H1 2011

India saw 391 M&A deals worth about $33 billion during January-June this year,registering a modest growth over in both number and volume in the year-ago period, says a report by VCCEdge.

Private equity deals on the other hand saw an uptrend, the financial research platform of investment tracking firm VCCircle said.

M&A deals worth $32.87 billion were announced in the first six months of this year, which is nearly the same as last year when it was around $32.59 billion (386 deals), it said.

Whereas PE deal volume so far this year have seen a surge of about 58% over last year, the report added.

The first half of this year saw private equity deals worth $5.76 billion, up 57.31% from the year-ago period when it stood at around $3.66 billion.

"Private equity deals have definitely seen an upswing on account of an active dealmaking environment and investments should continue to grow in the months ahead," VCCEdge Research Director Kunal Shrivastava said.

Meanwhile, the second quarter this year saw India Inc increasingly tapping foreign shores for its M&A transactions as outbound deals worth $7.75 were announced in the second quarter of this year whereas the first quarter had seen a dominance of inbound deals

"The $14.5 billion dominance of inbound M&A in the first quarter of the year largely came from two mega-ticket deals - the $7.2 billion acquisition of the Oil & Gas blocks of Reliance Industries by BP, and the $5 billion acquisition of Essar’s stake in Vodafone Essar by the Vodafone Group. No such deals were seen in the second quarter of the year," Shrivastava added.

The value of outbound deals surged significantly from $4.85 billion in the second quarter of 2010 to $7.75 billion in Q2 2011 and out of the five major deals in the April-Jun quarter, four were outbound.

Big-ticket deals (of over $100 million) constituted 87% of the total deal flow in the second quarter this year, VCCEdge said, adding that the energy sector saw the maximum M&A value of $4.43 billion, followed by Materials ($2.65 billion) and Information Technology ($1.51 billion).

Globally, as per deal tracking firm Dealogic, the year-to-date announced M&A volume totals $297.6 billion from 5,754 deals, which is a significant jump of 19.3% from the same period in 2010 when $249.5 billion worth deals were announced through 5,389 deals.