'Deal values will rise further'

Flagging investor segment ensured that merger and acquisitions, and private equity (PE) activity paled in 2009 in comparison with 2008. PE deal value took a 65 per cent knock in 2009 with deal volumes barely crossing $4 billion as compared to $11.96 billion in 2008. Harish H V — partner, National Management at investment advisory Grant Thornton, shares his views to Ravi Menon on what lies ahead.

What is your take on total deal volumes (M&As and PE) in the December quarter of 2009?
Deal volumes with regard to mergers and acquisitions (M&As) have dropped this year in general and the December quarter was not really an exception. However, we saw private equity deals showing a sharp increase in the second half of 2009 compared to the first half of 2009 or the second half of 2008. 

How did PE deals fare in 2009 over 2008?
We saw about $8 billion worth of PE deals in H2 2009 compared with about $3 billion in the previous two half-years.

Has there been a time lag in many of the deals this quarter? Will that lead to an exponential jump in deal volumes in the first quarter of 2010?
We should see a growth in deal volumes in the first quarter of 2010. However, I would not think that would be because of the lag in the M&A and PE pipelines. In fact, given the slowdown in the preceding 12 months, we should continue to see deal values going up.

And, how will M&A activity shape up in 2010?
We expect to see M&A activity bouncing back to H1 2008 levels in 2010 and a surge in cross-border deals especially outbound. However, we do not expect to see multibillion dollar acquisitions so deal values will take a while to get back.

Which sectors will be preferred sources for parking investments in 2010?
Investments will focus on healthcare, infrastructure and services which was the theme of 2009. We should see a sharp change in preferences towards manufacturing, in particular, the automobile sector in 2010.