India's M&A activity slows down due to 'flagging economy', says report

Corporate India's M&A deal tally took a 63.4 per cent hit in the July-September quarter of this year, largely because of a "flagging economy" that has led to the decline, says a Mergermarket report.

According to the global deal tracking firm, the third quarter of 2017 experienced a slowdown in Indian mergers and acquisitions, with the deal value declining by 63.4 per cent to USD 6.8 billion, compared to USD 18.5 billion in the same period last year.

Moreover, the number of deals announced specific to India was the lowest since 2009, the report said.

"The flagging economy of India with the GDP (growth) slowing to a three-year low of 5.7 per cent appears to have contributed to the decrease in the market," the Mergermarket report said.

Telecom was still the most active sector in the year by deal value, thanks to two large deals both valued over USD 1 billion in the first half of 2017.

During the third quarter of 2017, technology's deal value rose four times to reach USD 2.9 billion, from USD 577 million in the same period in 2016.

The top deal in the technology sector in the September quarter saw SoftBank acquire a 20 per cent stake in Flipkart for USD 2.6 billion, which is also the second largest deal in India this year, the report stated.

"In order to cope with intense competition, more activities within the sector are likely to appear in future," the report added.

India's in-bound activity in January-September increased by 20.5 per cent to USD 16.8 billion, from USD 14 billion a year ago.

While Indian M&A activities appear to be slowing in 2017, private equity buyouts saw 66 deals worth USD 7.4 billion in total, the highest deal value till September this year on Mergermarket record (since 2001).

The real estate sector saw maximum action in terms of value, with 4 deals valued USD 1.8 billion in the January- September this year. The deals in question include the Singapore sovereign wealth fund GIC's USD 1.34 billion acquisition of Indian commercial properties developer, DLF Cyber City Developers, in August, the report added.