Deals sealed by Indian firms via mergers and acquisitions (M&A) as well as private equity investments saw a 34% rise on a year-to-date (YTD) basis at $47.8 billion compared with the same period last year, a report by Grant Thornton shows. Although the deal value stands at a six-year high, the number of transactions have declined to 882 from 1,142 recorded in YTD 2016, the report states. Prashant Mehra, partner at Grant Thornton India, points out that private equity investments stand at a record-high on a year-to-date basis of $15 billion. “Despite speculation that deal activity may slow down with fund managers taking a cautious approach towards fresh funding, value of private equity investments jumped by 74% this year compared with the corresponding period in 2016. The reason for this significant jump in value is attributed to over 30 big-ticket investments that were valued at over $100 million compared with only 20 such deals executed in the same period last year,” Mehra points out.
On a YTD basis, M&A deals stood at $33 billion compared with $27.04 billion in the same period last year. “M&A values recorded a 22% growth as the year till date saw increasing domestic consolidation with deals like Vodafone-Idea, PropTiger-Housing.com, among others. However, unlike the years before, YTD 2017 saw a marked decline of 53% in cross-border deal values,” Grant Thornton pointed out in a report. However, the third quarter saw M&A values decline by 81% at $2.14 billion with cross-border activity falling by 75% as compared to levels recorded in Q3 2016.
Compared to this, PE investment values witnessed a robust 182% increase at $9.36 billion on account of 2 billion-dollar investments. The major one was SoftBank Vision Fund’s $2.5-billion investment in Flipkart in exchange for a 20% stake in the company. The report indicates that the investment is a mix of primary and secondary capital. As part of secondary transaction, the investment will provide partial exits to Tiger Global, two co-founders, employees and Accel Partners, the report added. The quarter also witnessed one of the biggest FDI in the real estate sector with GIC’s $1.4-billion investment in DLF Cyber City Developers for a 33% stake.
On a sectoral basis, the third quarter was dominated by investments in the start-up sector which dropped to the lowest in this quarter since 2015, contributing to 57% of total investment volumes. “Increasing investor caution towards new start-up investments is evident with angel and seed-stage investments activity recording the lowest levels in the last 10 quarters,” the report pointed out. E-commerce and real estate sectors witnessed $1-billion investment in this quarter, while the banking sector attracted five investments valued over $100 million.