India's M&A deal tally at $8.2 billion in Q1: Mergermarket

Mergers and acquisitions (M&As) in India jumped 5.2% to $8.2 billion in the first quarter this year, says a Mergermarket report.

According to the global deal tracking firm, amid a challenging global macro-economic environment and slowing pace of M&A activity in Asia-Pacific compared to 2015, India still gained 5.2%, over the same period last year, in terms of deal value.

Sector-wise, construction became the most active target sector in India, with the top two transactions in this sector amounting to $3.1 billion.

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The largest transaction targeting India's cement sector was UltraTech Cement's acquisition of the cement business from Jaiprakash Associates for $2.4 billion.

According to Mergermarket, the cement sector will remain hot for M&A transactions led by buy-side interest, ranging from foreign private equity players like KKR and Blackstone to homegrown corporates.

Transportation was another sector attracting increased interest with 11 announcements worth $732 million.

According to the report, India's foreign direct investment policy was reformed in the second half of last year, allowing 49% above overseas investment within aspects of the railway industry, which could lead to a future boost in the financing of railway development projects.

The energy, mining and utilities sector saw just six transactions in the first quarter of the year. However, the proposal to double clean energy cess on coal by the government in February this year is expected to accelerate the shift from traditional oil & gas towards renewable energy and thus drive a new wave of M&A transactions.

Meanwhile, the traditionally popular sectors, including pharma, medical & biotech and industrials & chemicals, were under-performing compared to the first quarter of 2015.

"In line with the government's vision to attract more and larger infrastructure investments to 100 smart cities across India, as well as increasing the connectivity between cities and towns, there is an expectation for more prominent M&A activity in the infrastructure-oriented sectors during the coming months," the report said.