M&A, PE deals by Indian cos surged 26% in 2014

Resurgence in business sentiment following the new government at the Centre pushed up the value of M&A as well as private equity deals involving Indian firms by 26 per cent to $48 billion this year, says a report.

The trend is expected to remain bullish in 2015, global consultancy Grant Thornton said.

Mergers and acquisitions (M&As) and PE activity together had accounted for $38 billion involving 949 deals in 2013.

The surge in M&A and PE deal activity was largely driven by the "resurgence in the business sentiment due to the new government taking charge in May, 2014", the report said.

There have been 1,116 deals worth $48 billion involving Indian companies from January to December 10.

"Though a large section of the 2014 deals appeared to be the pipeline deals which were on the back burner and were revived due to change in sentiment, the 2015 outlook remains bullish," Grant Thornton India Partner Prashant Mehra said.

Noting that the uptick in M&A deals won't sustain on positive sentiment alone, Mehra said: "It is critical that the new government accelerates the reform process to keep the deal and growth momentum going".

The total value of inbound deals -- wherein foreign companies or their subsidiaries acquired Indian businesses -- rose by 32 per cent, in 2014, from $8.7 billion in the preceding year.

However, outbound deals, in 2014, dropped by 38 per cent to $5.7 billion (111 deals), for the period under review.

In the private equity sphere, as many as 565 transactions valued at $11 billion were announced, this year uptil December 10, up by 11 per cent compared to 2013.

As many as 452 private equity deals worth $10 billion were recorded in 2013. Of these 20 investments were worth over $100 million each.

Sectors such as IT and ITES, Pharma and Healthcare, Banking and Financial Services (BFS), Telecom, Retail/Consumer and Real estate sectors were leading in the M&A space.

IT and ITeS, E-commerce, BFS and Infrastructure sectors were major players in the private equity space.

"Given the current deal making sentiment and deal momentum, we expect sharp increase in deal activity (both M&A and PE) across sectors especially, healthcare and pharma, IT/ TES (especially, e-commerce) and financial services," Mehra said, adding that infrastructure sector which was subdued in 2014 could also "turn-around" in the coming time.

Private equity funds would continue to focus on exits helped by a robust IPO market, among others, the report said.