Deal Street runs out of fizz in Oct ober

NEW DELHI: It���s not just the stock market that has sunk to levels seen nearly three years ago. Corporate deals involving India Inc have also shrunk to a two-and-halfyear low. For the first time in two years, October saw mergers & acquisitions (M&A ), private equity (PE) and venture capital (VC) deals drop to the 2006-level .

In the past two years, on an average, there were 40-60 M&A deals in India per month. And the number of PE & VC transactions has averaged from 30 to 35. But in October, the number plunged to just 26 M&As and 12 PE/VC deals, according to the latest deal-tracker of advisory firm Grant Thornton. Last month, the number of PE/VC transactions was equal to the level last recorded in January 2006.

Interestingly, the deal activity appears to be closely linked to the fortunes of the stock market. The Sensex closed October at the sub-10 ,000 level, for the first time, since January 2006. The number of PE transactions had risen steadily from 12 deals during January 2006 to a high of 60 during January 2008. The Sensex had also peaked during the same period, hitting an all-time high of 21,206 in January 2008.

Grant Thornton partner (transaction advisory services ) Harish HV said: ���The private equity scenario is likely to slow down temporarily, even though there is a substantial amount of money available for investment . Companies and investors are adjusting to the new reality of valuation and also re-examining fundamental investment assumptions.��� The two prominent PE deals, last month, were those involving Premji Invest ��� the $1-billion investment fund of Wipro chairman Azim Premji ��� picking up a 3% stake in NSE for $100 million, followed by Investcorp���s $98-million investment in Redington.