September quarter sees 210 deals worth USD 11.3 bn: EY

As many as 210 merger and acquisition deals, worth a total value of USD 11.3 billion, involving Indian companies were signed during the September quarter, according to a new study.
According to EY's latest Transaction Quarterly report, deal volumes in September quarter fell 15 per cent on year- on-year basis, while the aggregate disclosed deal value rose 29 per cent primarily due to six mega deals with size of USD 500 million and above.
"While the overall deal activity was muted due to an uncertain global environment, the domestic M&A activity remained healthy owing to strong macroeconomic environment and the growing need for digitalisation across all sectors," said Amit Khandelwal, Partner and National Director Transaction Advisory Services, EY.

Sector-wise, financial services was most active in terms of both deal volume and value (28 deals totalling to USD 4.7 billion).
In terms of number of deals, technology dominated with 26 transactions followed by infrastructure sectors (22 deals). In terms of deal value, pharmaceuticals with USD 1.5 billion and cement and building products (USD 1.4 billion) were in focus, the report added.
Domestic activity continued to dominate the Indian deal landscape recording 137 deals with an aggregate disclosed value of USD 7.3 billion.

The increase in the value was mainly due to two large deals -- Nirma's announcement to buy Indian cement business of LafargeHolcim for USD 1.4 billion and the agreement between HDFC and Max Group to merge their life insurance businesses to create India's second-biggest insurer.

The cross-border M&A activity declined from the year-ago level. The deal volume dipped substantially to 73 from 114, while the disclosed deal value declined by 33 per cent to USD 4 billion.
"On the cross-border front, both the inbound and outbound activities were impacted due to a slide in investors' confidence and negative business sentiments globally. However, in the longer term, the M&A activity is expected to pick-up as the global environment stabilises," Khandelwal said.
As per the report, deal activity involving Indian companies is expected to stay tepid through the remainder of 2016 as investors remain cautious owing to an uncertain global business environment. However, the positive outlook for India is likely to drive traction for M&A activity in the long term.

"A resilient domestic economy coupled with healthy capital markets, easing credit conditions and steady progress on reforms, such as the passage of Goods and Services tax, should boost corporate earnings and help businesses create opportunities for inorganic growth," the report said.