M&A deal activity records 87 pc plunge in value in May: Report

The merger and acquisition activity recorded an 87 per cent fall in terms of value and a 27 per cent drop in volume last month, due to weakness in the rupee, spike in crude oil prices and indecisiveness among investors until results of the general elections, according to a report.

"While the nation was warily polling and awaiting for the election results, the month witnessed 33 M&A (merger and acquisition) transactions aggregating to USD 3.4 billion translating into a decreased deal activity compared to May 2018 with 27 per cent fall in volume and 87 per cent drop in value," according to monthly M&A Dealtracker report by Grant Thornton.

The assurance, tax and advisory firm said it was also impacted by the month witnessing deals falling apart in the absence of regulatory approvals.

However, compared to April 2019, May saw a significant increase in deal value despite fall in volume, it noted.

"M&A transactions witnessed low traction across domestic consolidations and cross-border acquisitions compared to May 2018 that saw notable deals like Walmart-Flipkart, and Tata-Bhushan Steel, among others," said Pankaj Chopda, director, Grant Thornton India LLP.

Absence of big-ticket marque deals and delays in absence of regulatory approvals impacted the overall M&A transaction value, he added.

Chopda further said the notable deals for the month includes India Grid's acquisition of five electricity transmission assets from Sterlite Power, Reliance Nippon Life Asset Management's stake sale to Nippon Life and others. These deals alone accounted for 78 per cent of the total M&A deal values.

May recorded one deal in the billion-dollar category and three deals valued and estimated over USD 100 million each together capturing 90 per cent of deal values, the report added.

According to the report, May 2019 deal performance added to the continuing weak performance of the year-to-date deal activity both in terms of value and volume.

Manufacturing, energy, pharmaceutical, information technology and banking sectors led the deal value so far in 2019 capturing 81 per cent of the overall M&A values. On the other hand, technology-enabled sectors such as IT and start-ups dominated the M&A deal volumes with 61 deals capturing 34 per cent of volume chart.

"We expect increased activity in the coming months with the new government in place.We are also optimistic of witnessing big-ticket deals in the coming months considering the pipeline which includes Jaypee Infratech-NBCC, Snapdeal-Shopclue, among others," Chopda added.