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Vibrant India: With $110 bn in private equity and M&A transactions, deal street records all-time high volumes in 2018

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Updated: January 25, 2019 7:37:51 AM

Deal value in 2018 crossed $110 billion in around 1,250 private equity (PE) and mergers & acquisitions (M&As) transactions, surpassing all previous records, according to the annual deal tracker report by Grant Thornton.

Deal value, Deal value at record high, Grant Thornton reportDeal value at record high of 0 billion in 2018: Grant Thornton report

Deal value in 2018 crossed $110 billion in around 1,250 private equity (PE) and mergers & acquisitions (M&As) transactions, surpassing all previous records, according to the annual deal tracker report by Grant Thornton.

The year also recorded the highest deals in the billion-dollar category, with 18 deals clocking $72.5 billion. M&A transactions involving Indian companies reached $90 billion in 2018 with the surge in deal activities, mainly driven by the objectives of consolidation by expanding the market share, buying technology and diversifying market presence.

Prashant Mehra, partner at Grant Thornton India, said in the report that domestic consolidation took a larger piece of the pie with around 60% of the overall M&As transaction values in 2018.

“This accounts for more than 50% growth over 2017, driven by transactions in the energy sector. Inbound deals accounted for around 30% of the total M&A deal values this year. Walmart and Schneider were among the key global contributors to investments, and this is expected to trigger further interest from overseas corporates and investors in the coming year,” Mehra said.

While telecom led the M&A pack with deal values aggregating to $19 billion on account of a large merger by monetising non-core operations, e-commerce witnessed the single-largest transaction in its history and also the largest inbound transaction for India (Walmart–Flipkart transaction of $16 billion). “Consolidation, cross-border and IBC transactions fuelled the growth in the manufacturing sector to deals aggregating to $16billion; and energy sector garnered deals aggregating to $12 billion, driven by the consolidation fervour and strengthening core capabilities,” the report stated.

Inbound deal values bounced back, and at $25.7 billion were 4.3 times the 2017 values. This is also the highest value since 2011, the report said. Outbound deal values recorded an all-time high of $12.8 billion, a 5.9 times increase compared to 2017.

Total cross-border M&As reached $38.5 billion, 4.7 times the deal values and a 17% increase in deal volumes compared to 2017. The US is currently the top acquirer of Indian companies and the top targeted nation by Indian companies, according to the report.

PE deal activity remained muted in 2018 as compared to 2017 with a marginal growth in deal volumes. While start-ups relished big-ticket investments; BFSI and e-commerce were fuelled by small ticket investments. The year saw PE deals worth $20.450 billion, compared with $20.495 billion in 2017. Volumes increased with the year witnessing 786 deals compared to 736 in 2017.

Vrinda Mathur, partner at Grant Thornton India, said in view of the upcoming general elections, PE/venture capitals may consider taking a wait-and-watch approach in the immediate term. “However, this may not affect the already prevailing positive sentiments in sectors like technology and consumer. From an exit standpoint, IPOs may tread a cautious path making strategic sale a preferred mode,” she said.

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