Deal values rose a record 90% in the first half of 2018 to $74.8 billion from a total of 638 deals, helped by big ticket consolidation and high-value private equity (PE) investments, says the latest Grant Thornton deal tracker report.
The Walmart-Flipkart deal in May was the biggest deal in the first half of the year. Walmart acquired a 77% stake in e-commerce firm Flipkart for $16 billion, in the largest cross-border M&A deal involving an Indian business and the largest foreign direct investment (FDI) in the country.
So far this year, there have been 10 deals valued in the billion-dollar category and 52 deals valued and estimated at and above $100 million, which together contributed to 93% of the total deal values, according to the assurance, tax and advisory firm.
The first six months of the year saw India Inc's M&A values go up 112%, over the same period last year. These included 10 billion-dollar deals, contributing to 84% of total M&A values.
PE investments grew by 12% in terms of investment values on account of increased big ticket investments. The first half of 2018 witnessed 26 investments worth $100 million and above and 17 investments between $50 million—$99 million each, contributing 78% of PE investment values. The average deal size also increased from $20 million, last year, to $23 million, in H1 2018.
Prashant Mehra, partner, Grant Thornton India, says that PE investments were largely characterised by large-value deals (which were more than $100 million) mainly due to increasing exposure of pension funds, sovereign wealth funds and global buyout funds in India.
“We expect this momentum to continue on account of increased competition, massive amount of dry powder available to be deployed and encouraging government initiatives like incubation of tech funds among others,” he said.
Overall, the sectors that attracted big ticket investments were e-commerce, telecom, energy, manufacturing, infrastructure, banking and real estate.
In terms of domestic deals values, the first half of the year saw a growth of one-and-a-half times to $41 billion from 140 transactions, driven by a stable economy. The surge in domestic deal activity was also helped by the Bharti Infratel-Indus Towers mega merger, valued at $14.6 billion, and seven other big ticket deals in the billion-dollar category.
Inbound deal activity grew more than six-fold in value compared to that in the year-ago period, primarily driven by the $16 billion Walmart-Flipkart deal. Inbound investments mostly came from the U.S., France and Singapore, which collectively contributed to 94% of total inbound deal values.
Outbound deal activity more than tripled to $3.1 billion from 44 deals driven by companies with strong balance sheets expanding their global footprint. Technology, pharma and manufacturing, witnessed maximum activity, together contributing 55% of deal volumes.
The US and Singapore were the largest recipients of investment, accounting for 68% of outbound deal values, Grant Thornton says.
In terms of sectors, telecom accounted for 29% of total deal value driven by two billion-dollar deals in the towers and infrastructure segment.
Startups led the deal volumes, with 53, helped by a renewed interest from domestic investors in the fintech sector, followed by the discovery platforms.
