Private equity players betting high on India; pour USD 7 bn in H1 this year: ASSOCHAM Study

Private equity funds are betting high on India and its growth outlook, committing USD 7.1 billion in first half of 2015 , up 38 per cent year-on-year in 460 deals with IT&ES, banking -finance and pharmaceuticals being the favourites, an ASSOCHAM study has said.

The private equity inflows in H1 of 2015 point to the higher interest generated in terms of number of deals which have gone up by 62 per cent, Y-on-Y. In value terms, the deal sizes this year compare quite well against USD 5.11 billion in the same period of 2014 and USD 5.64 in the year before, the study noted, compiling various transactions.

When it comes to mergers and acquisitions, there have been around 277 M&A deals (excluding Private Equity) valuing around USD 15.8 billion in the H1, 2015 against 269 valued around USD 17.2 billion in 2014, when a quantum jump was provided by the Sun Pharma - Ranbaxy mega merger worth USD 3.2 billion.. The M&As had aggregated 255 for the corresponding period of 2013 worth USD 12 billion.

The top three sectors dominating the M&A Scenario in H1 2015 are IT & ITES (38 pc) followed by Banking & Financials Services (14 pc), Pharma, Healthcare & Biotech (11 pc) and others.

While the M&A opportunities remain robust, especially when there are companies on the block with high level of leverage, enhanced interest by the private equity players certainly remains a noteworthy point, said ASSOCHAM Secretary General Mr D S Rawat.

The inbound M&As saw more interest in terms of value to USD 7.4 billion in H1 of 2015, against USD 4.8 billion in the same period of the previous year, reflecting much more global interest in the Indian economy that the domestic firms looking outward. While partly it is because of increased opportunities in the Indian markets, some amount of credit is due to the pragmatic policies being followed by the Narendra Modi Government, which is seeking to unclog the investment scenario, the paper pointed out.

The H1 2015 has also observed more high value deals compared with the same period in 2014, with 15 deals valued above USD 100 million each and 19 deals in the USD 50-100 million range. The top 30 deals accounted for around 60 per cent of the total deal value in H1 2015.

Highlights of the M&A deals in H1 2015 included few high value mergers including Vedanta-Cairn India deal valuing at around US$ 2300 million, Center bridge Partners - Suzlon Energy deal valuing at around US$ 1200 million and others.

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