India's M&A activity reaches highest on record in Q3, up 36.2% by value

The highest valued deal of the year was Grasim Industries' $8 billion acquisition of Aditya Birla Novo in August

India's merger and acquisition (M&A) activity has reached its highest on record, up 36.2 per cent by value at $46 billion across 278 deals as compared to the whole of 2015, which saw $33.8 billion across 419 deals.

The third quarter alone has reported 98 deals with a value of $27.7 billion, reaching the highest quarterly value on record. According to Mergermarket intelligence, targeted government policies have led to consolidation within the sector.

According to Mergermarket global M&A trend report for Q1-Q3 2016, India's M&A activity (278 deals, worth $ 46 billion) has reached its highest on record, up 36.2 per cent by value compared to the whole of 2015 (419 deals, worth $33.8 billion), with Q3 alone – comprising 98 deals, worth $27.7 billion – reaching the highest quarterly value on record.

The highest valued deal of the year, Grasim Industries' $8 billion acquisition of Aditya Birla Novo in August, has resulted in telecommunications (five deals, worth $16 billion) overtaking all annual deal values targeting the sector on record.

On global M&A activities, the report said that global M&A dealmaking in 2016 has not been able to achieve the dizzying heights reached in 2015, with political uncertainty, increased regulation and decreased confidence on boards all weighing down on activity.

To-date, in 2016, 12,283 deals worth $2.2 trillion represent a 20.2 per cent value decrease compared to the same period in 2015, which saw $2.8 trillion worth of M&A activity across 13,263 deals.

M&A activity targeting Asia-Pacific (excluding Japan) has remained robust, reporting 2,557 deals worth $485 billion so far in 2016, despite experiencing a decrease compared to a record 2015.

Asian dealmakers have continued to be dominant on the global scene, with deal value targeting the region accounting for 22 per cent of global M&As, its highest share on record.

Despite concerns surrounding Brexit, the immediate drop in sterling following the referendum vote caused opportunistic dealmakers to engage in a bargain hunt for UK assets. As a result of a few big-ticket deals, Q3 inbound activity into the UK (121 deals, worth $49.3 billion) jumped 283.0 per cent by value compared to Q2 (159 deals, $12.9 billion).

US M&A activity continued to be relatively resilient throughout the third quarter, in spite of government action on matters such as antitrust and uncertainty over the upcoming presidential election, along with the added expectation of an interest rate hike by year's end. The US recorded its fifth-highest value on record (since 2001) for the Q1-Q3 period, following peak highs seen in the 2006-2007 pre-crisis and 2014-2015 recovery periods.