Corporate India's shopping spree continued unabated in the third quarter of this year, with merger and acquisition (M&A) deals worth USD 12.17 billion were announced, taking the year-to-date tally to USD 28 billion, says a report.
According to global audit, tax and assurance firm Grant Thornton, the significant rise in M&A deal activity in the September quarter was majorly driven by USD 3 billion deals contributing to over 50 per cent of the values.
The quarter also witnessed two mega mergers in telecom and banking sectors.
Overall M&A values saw a 33 per cent rise in the first nine months of this year largely owing to increase in domestic deals along with big ticket mergers and restructurings.
During January-September period, there were 244 domestic deals worth USD 11.84 billion, and 13 mergers and internal restructuring worth USD 4.94 billion.
However, cross border M&A activity declined by 13 per cent owing to fewer big-ticket transactions. There were 17 deals over USD 100 million so far this year as compared to 26 such deals in January-September 2015.
The deal outlook remains bullish for the months ahead.
"There is further rise expected in domestic M&A, driven by the need for consolidation. It is primarily seen in the infrastructure and manufacturing sectors," Prashant Mehra -- Partner at Grant Thornton India LLP said.
Moreover, improvement in doing business rankings partly due to reforms and partly methodology will further boost foreign investment in the wake of weak global markets, Mehra added.
In terms of sectors, manufacturing, BFSI, energy, pharma and telecom were key contributors with collective contribution of over USD 20 billion, the report said.
US investors maintained their lead, investing in 58
deals worth USD 4.8 billion.
"The Government's 'Make in India' policy has created a more favourable investment environment for foreign firms, especially in manufacturing and chemicals sector," the report said.
Meanwhile, private equity (PE) buyout value rose for the third consecutive year, hitting a record USD 12.6 billion.
In terms of deal count, 90 acquisitions were made by PE last year -- second highest for a year since 117 deals in 2015.
The report found that foreign private equity houses played an increasingly important role across Indian deals as 91.8 per cent of the total USD 12.6 billion was represented by foreign PE firms, and more than seven in every 10 deals involved a foreign sponsor.
"Domestic private equity firms claimed only an 8.2 per cent market share with 21 deals," the report said adding that this is sharp decline from 38.3 per cent market share in terms of deal value in 2011.