M&A deal value drops in February as investors take wait-and-watch approach ahead of elections

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Published: March 24, 2019 7:12:47 PM

With respect to deal making in startups in 2018, 26 per cent of the capital poured into Indian businesses went to startups while in terms of deal volume it cornered a lion's share of 59 per cent.

The fall is even steeper from January 2019 that saw .3 billion worth M&A deals.

With Lok Sabha 2019 elections just round the corner, investors in Indian market have gone deeper though for a short term into the wait-and-watch mode with respect to the deal environment. Consequently, the deal value in February dropped by 34 per cent to $1.24 billion from $1.9 billion in the same month last year.

The fall is even steeper from January 2019 that saw $2.3 billion worth M&A deals, according to Grant Thornton’s monthly report on deals.

Shortening of the run-up period to the national elections will only deepen the wait and watch approach in the deal environment in the short term and much is expected post the results of the general elections, PTI quoted Pankaj Chopda, Director, Grant Thornton India.

However, in terms of volume, February saw a marginal rise to 44 from 40 in the last year same period.

While February 2019 number of deals valued at around more than $100 million were same as of February 2018, the high value ones had combined value of only $0.9 billion versus $1.5 billion last year’s February, PTI said citing the report.

February 2019 M&A deals had mostly cross-border transactions while February 2018 had a combination of cross-border and merger transactions.

“”The month of February recorded the highest volumes in seven months, demonstrating the strong urge to expand outside local territory surpassing global headwinds,” Chopda said.

With respect to deal making in startups in 2018, 26 per cent of the capital poured into Indian businesses went to startups while in terms of volume it cornered a lion’s share of 59 per cent, Grant Thornton in its annual report Fourth Wheel 2019 said.

Bengaluru retained the top startup destination tag with 217 deals attracting $4.9 billion closely followed by NCR with 215 deals with $5.1 billion and Mumbai that recorded 174 deals worth $5.8 billion.

In terms of exits, buyouts/M&A is the preferred exit route for 39% startups down from 46% in 2018 even as IPO is the most likely path for 38% of them, said another report by InnoVen Capital last month.

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