India Inc’s deal making activity eased in the first half of this year with 162 deals worth USD 17.5 billion, even as the momentum looks bullish in the long run, says a Mergermarket report.
According to the global deal tracking firm, deal making activity in the first half of the year was down 4 per cent in value terms, compared to deals worth USD 18.2 billion in January-June period of 2015.
“With the M&A deal-making in Asia-Pacific experiencing a slowdown, India’s M&A activity also eased in general,” Mergermarket said in a report.
“Compared to historical high in the same period a year ago, the deal count was 26.7 per cent fewer and deal value was 4 per cent lower,” it added.
Technology; pharma, medical & biotech; and energy, mining & utilities were the top three sectors to see a significant decline in deal volume.
The report noted that technology was still one of the most active target sectors by deal count, despite dropping to 26 deals at USD 2.3 billion in the first half, compared to 42 transactions valued at USD 1.5 billion in the year-ago period.
Construction sector occupied the largest market share (20.5 per cent) by deal value, recording seven deals worth USD 3.6 billion in the first half of this year, compared to eight deals worth USD 0.8 billion in January—June period of 2015.
Though the momentum in corporate India’s deal making activity has eased in the first half of this year, the long term momentum looks bullish, it added.
“In the long run, a substantial growth by deal volume and deal value will be anticipated as the Modi government has committed more infrastructure spending and relaxed FDI rules in the construction sector,” the report said.
However, it added that “for now, mega-deals would be rarely seen, as investors are waiting for construction projects to achieve stable cash flow.”
In the next six months, attention could be drawn to the construction and the renewables sectors, Mergermarket said.
Following Brexit, Indian conglomerates may consider cashing in some of their overseas investments to brace for upcoming changes in policies and regulations, it said.
India’s inbound activity during the first six months of 2016 recorded 82 deals worth USD 8.9 billion, up 21.9 per cent by value from the first half of 2015, when deals worth USD 7.3 billion were announced.
Outbound activities bounced back from the two-year low seen in the January-June period of 2014, standing at USD 2.5 billion, up 97.5 per cent on a year-on-year basis, the report added.