India M&A activity up 12% in 2012

The value of announced mergers & acquisition (M&A) deals involving Indian companies stood at $43.4 billion last year, a 12 per cent rise compared to 2011. M&A volume in the quarter ended December stood at $17 billion, a rise of 99 per cent from the quarter ended September and a 362 per cent rise from the year-ago period. The average deal size for disclosed values rose to $91 million, compared with $76.6 million in 2011, according to a Thomson Reuters research report.

The volume of domestic M&As stood at $12.3 billion, up 69.4 per cent over the year-ago period---the highest annual volume since 2010 ($13.6 billion). Of this, the financial sector accounted for $3 billion, a rise of 54 per cent from 2011. The materials sector accounted for $1.9 billion (15.8 per cent market share), a 116 per cent rise over 2011. Total cross-border deals stood at $26.9 billion, a fall of 11.6 per cent compared to 2011, despite the 177 per cent sequential rise in deal value at $12.5 billion during the quarter ended December, from $4.5 billion in the previous quarter.

 

The volume of completed M&A deals involving Indian companies, however, declined 62 per cent to $18.3 billion compared to last year, the lowest annual volume since 2005, when it stood at $17.9 billion. Total inbound M&A activity for Brazil, Russia, India and China stood at $97.4 billion. India accounted for 15.7 per cent ($15.3 billion) of this. China’s share stood at 36.9 per cent ($35.9 billion).

The materials sector dominated the industry breakdown, accounting for 22.8 per cent of India-involved acquisitions worth $9.9 billion, a 52 per cent rise from 2011. This was primarily driven by the merger of Sesa Goa, a 55.1 per cent-owned unit of Vedanta Resources, with Sterlite Industries (India) in a deal valued at $3.9 billion, the largest M&A deal involving India this year.

M&A activity targeting India slowed last year, with a deal value of $4 billion, a 22 per cent decline from 2011.

With a volume of $1.1 billion, the energy & power sector accounted for 28.8 per cent of private equity-backed M&A activity in India, a 92 per cent rise from the year-ago period. This was driven by the acquisition of Transocean’s 38 water drilling rigs by the UAE’s Shelf Drilling International Holdings, in a deal valued at $1.05 billion.

The acquisition of Indian companies by foreign firms slowed, with 307 announced deals worth $15.3 billion, down 23.8 per cent from 2011 and the lowest since 2009 ($7.4 billion).

Indian acquisitions abroad rose 12 per cent, with deal value at $11.6 billion, a 12 per cent rise over last year. In the quarter ended December, deal value jumped 442 per cent compared to the previous quarter and 376 per cent compared to the year-ago period.

The energy & power industry accounted for 43 per cent of India’s outbound activity, with $5 billion worth of transactions, up eight times from 2011. This was driven by ONGC Videsh’s announced stake acquisitions in Atyrau-based North Caspian Operating Co BV from ConocoPhillips. The deal also made Kazakhstan the most targeted nation for India’s outbound activity in terms of deal value, with a 43 per cent market share. The US accounted for 15.5 per cent ($1.8 billion), recording the higher number of acquisitions from Indian acquirers.