The transaction of USD 14.2 billion in PE activity was a record one, but with lowest number of deals on a year-on-year basis in last five years. This trend resulted in PE investment average deal size at USD 37 million.
India Inc’s deal activity in the first six months of this year encompassing both M&A and private equity transactions, stood at USD 32.1 billion, down 57 per cent over last year, a report said. According to Grant Thornton’s Half-Yearly Dealtracker 2019, the year so far recorded restrained deal activity, amid US-China trade war, spike in international crude oil prices and uncertainties around the US sanctions on Iranian oil imports.
The deal value in the first half of this year dropped to USD 32.1 billion from USD 74.4 billion in the year ago period. In terms of number of deals, the first half (January-June) of 2019, witnessed 610 deals which was the lowest compared to the corresponding period of 2017 and 2018.
Out of the USD 32.1 billion worth of deals, merger and acquisitions (M&As) amounted to USD 17.9 billion, while private equity transactions amounted to USD 14.2 billion. The transaction of USD 14.2 billion in PE activity was a record one, but with lowest number of deals on a year-on-year basis in last five years. This trend resulted in PE investment average deal size at USD 37 million.
Distressed assets deals cornered the maximum share in the M&A space, the report said adding that the Insolvency and Bankruptcy Code (IBC) along with supportive regulations will make this space a pacesetter in the coming years. A sector-wise analysis shows that manufacturing, energy and natural resources, banking, IT, infra, pharma and start-ups attracted good investor interest.
The January-June 2019 period recorded only five deals valued in the billion-dollar category compared to 10 witnessed in the corresponding period a year-ago. The big-ticket deals in first half contributed to 83 per cent of the overall deal values, the report added.
Going ahead the deal outlook looks bullish.
“We are confident of witnessing an accelerated and mature deal market with a surge in transactions and investments with the NDA government coming to power again,” said Prashant Mehra, Partner, Grant Thornton India LLP. Mehra further said “it is expected to streamline existing reforms and introduce new ones, enabling renewed deal activity and minimising uncertainty in the deal landscape.”