Total M&A, PE deals value drops 13 pc to USD 9,788 million in July

Total value of merger and acquisitions and private equity deals dropped by 13 per cent to USD 9,788 million in July as sentiment was affected due to Brexit-related uncertainty and rising geopolitical tensions, says a report.

The total M&A and private equity deal value in the same month last year was at USD 11,210 million, according to Grant Thornton's PE Dealtracker July 2019 report.

On the volume side, the number of M&A and PE deals was 110 in July, 15 per cent lower from 130 in July 2018, it said.

According to the report, global growth remains subdued. The US further increased tariffs on certain Chinese imports, and China retaliated by raising tariffs on a subset of US imports. Additional escalation was averted following the June G20 summit resulting in the US-China trade truce being agreed upon.

"Global technology supply chains were threatened by the prospect of US sanctions, Brexit-related uncertainty continued, and rising geopolitical tensions roiled energy prices. These developments were witnessed affecting the overall deal sentiment," it said.

The month of July 2019 recorded 110 M&A and PE deals worth USD 9.8 billion which is 3 times the deal values, but 10 per cent short of deal volumes compared to June 2019. However, compared to July 2018, this year, July recorded a declining trend both in terms of values and volumes.

The report further said that the month recorded 71 PE deals worth USD 5.5 billion comprising one deal in the billion-dollar club and six deals valued at and over USD 100 million each, together totalling to USD 4.8 billion, forming 87 per cent of the total PE deal values.

"The tax and regulatory environment in India continues to be conducive for enhanced PE deal activity. In particular, the liberalised ECB framework widens the foreign source funding options for economically-distressed business units.

"This has further added to heightening the PE investments in India with the month recording the highest yoy value with investment worth USD 5.5 billion across 71 deals including the Brookfield-Reliance Jio Infratel deal worth USD 3.7 billion, marking the single-biggest private equity deal in India," Pankaj Chopda, Director, Grant Thornton India LLP said.

While telecom, start-up, energy and infra sectors attracted high value investments from both strategic and financial investors, start up, IT, banking and e-commerce sectors remained active pushing the PE deal volumes during the month, he noted.

On the outlook, Chopda said though the Union Budget has laid down a roadmap for growing the economy in a sustained manner with a focus on both urban and rural sectors, the impact on deal activity will depend on the measures and policies by the government to counter the slowdown, implement/ promote growth-focused investment plans and impact of global economic trends.