India Q1 M&A deal down 23% to USD 4 bn: Report

Written by PTI | New Delhi | Updated: May 1 2014, 00:40am hrs
The merger and acquisition value in the first quarter of this year declined by a significant 23 per cent to USD 4 billion over the corresponding period a year ago, a Grant Thornton report said.

In the first three months of 2014, M&A deals worth USD 4.07 billion took place, while the value in the same period in the previous year was USD 5.3 billion. The number of merger and acquisition (M&A) deals was 128 against 131 transactions in the comparable period, according to the latest issue of Grant Thornton Deal Tracker.

The declining trend is primarily because corporates are on a wait and watch mood amidst the General Elections, the report said.

"M&A deal value has declined by 23 per cent in Q1/14 over Q1/13 which possibly reflects the wait and watch stance of corporates given the General Elections, which brings in own share of uncertainty," Grant Thornton Partner Raja Lahiri said.

Of late, there are signs of M&A deal momentum picking up with some large deals like Sun Pharma-Ranbaxy and overall pick-up in global M&A outlook, which should trigger an upward trajectory in deal momentum going forward, he added.

External pressures and political situation have impacted deal values which clearly mean that growth in value will need better economic scenario and more particularly a better capital and debt market support which has been missing, Harish H V, Partner, Grant Thornton, said.

The top sector in M&A, in terms of value, was the energy & natural resources segment, which accounted for 20 per cent (USD 798 million) of overall deal activity. In terms of volumes, IT & ITES saw 25 deals (out of 128).

"The deal activity has been vibrant across the sector driven both by domestic consolidation and private equity investment," Grant Thornton India Partner Siddhartha Nigam said.

He further noted that the regulatory signals post the election results will be an important driver for the growth in retail sector and will also impact the deal activity in the sector.