mergermarket, an independent Mergers and Acquisitions (M&A) intelligence service, today released its Indian M&A Roundup Q1-Q3 2011 report. With 177 deals totaling USD26.8 billion, Indian M&A saw a decrease in the first nine months of 2011 of 41.5% by value and 16.9% by volume compared to the same period in 2010.
However, inbound deals provided the much needed respite to the gloomy M&A trends. It accounted for 88.1% of all Indian M&A activity, four times that of Indian investments overseas, a testament to the importance of inbound foreign investment to the Indian economy. Inbound deals stood at USD7.32 billion in Q3 compared to USD2.65bn in Q2.
“With India’s benchmark SENSEX slumping almost 23% year to date, rising inflation and interest rates and ongoing global woes, it is not surprising that domestic M&A dwindled in the Q1-Q3 2011 as compared to the same period last year,” said Anjali Naik, Deputy Editor of mergermarket, Asia Pacific.
Energy, Mining and Telecommunications sectors accounted for more that 50% of the M&A deals in the country. However, each of the sectors saw a sharp decline when compared to the corresponding period last year. Energy and Mining stood at USD7.83 billion, a fall of 35.6%. Telecommunications sector saw a massive decline in both deal value and deal count, from 16 deals worth USD19.56 billion in Q1-Q3 2010 to three deals worth USD6.13 billion in Q1-Q3 2011, a significant drop of 68.7%. Sectors that showed positive growth include Industrial and Chemical sector (69.2%), Businesses Services (852%), Consumer (28.3%), Media (170.7%) and transport (111.1%). Some of these sectors also accounted for higher deal counts but were low in value.
“Going forward, however, there could be alternative debt and private equity financing opportunities to be had as IPO plans are cancelled and unwieldy Indian conglomerates spin-off non-core assets, mirroring global heavy weights. While valuations and deal values might be muted, activity is expected to continue on a smaller scale in the industrials and chemicals, financial services and consumer sectors,” Naik said.
The total deal value in the first nine months of 2011 was largely contributed by two inbound deals – BP Plc's USD7.2 billion bid for Reliance Industries Limited and Vodafone Group Plc's purchase of 33% stake in Vodafone Essar Limited (USD5.46 billion). The Vodafone Group Plc/Vodafone Essar Limited deal, announced in July, is the second largest transaction recorded in Q1-Q3 2011, boosting the Q3 inbound deal value to USD7.32 billion.
Morgan Stanley has edged out Goldman Sachs to take top spot in the league tables by value for Q1-Q3 2011, having advised on seven deals worth USD14.4 billion. Ernst and Young topped the league table by deal volume, advising on ten deals. In the legal adviser league tables, AZB & Partners continues to dominate by value, although it has been dethroned at the top of the deal count tables by Desai & Diwanji which advised on 31 deals in the year-to-September.
