India's merger and acquisition deal tally crosses $25 billion this year: Grant Thornton

NEW DELHI: The Merger and Acquisition (M&A) activity in India reached USD 25.65 billion in the first nine months of this year, a slight decline year-on-year because of smaller domestic deal size and fewer restructurings.

According to assurance, tax and advisory firm Grant Thornton, there were 428 M&A transactions worth USD 25.65 billion during January-September, as against 434 deals worth USD 26.90 billion in the year-ago period.

"M&A remained relatively the same as last year both in terms of value and volume. Most part of the M&A deal value has actually come from inbound investments where USD 12.6 billion has been infused thereby demonstrating a growth of almost 40 per cent in value terms," Grant Thornton India LLP Partner Prashant Mehra said.

There were 230 domestic deals worth USD 6.91 billion, registering a decline both in terms of number and value of transactions, while there were just 6 mergers and internal restructuring worth USD 1.32 billion. In January-September 2014, there were 33 such transactions worth USD 3.31 billion.

Meanwhile, cross border M&A activity increased by 24 per cent in value terms during the first nine months of this year.

In terms of sector spread, M&A activity was driven by energy and natural resources contributing 32 per cent of deal values along with IT & ITeS and pharma and healthcare together contributing another 32 per cent.

According to Grant Thornton, going forward, the outlook for domestic and inbound M&A looks bullish.

"Indian assets are expected to remain in focus as Inbound and Domestic M&As accelerate on the back of pickup in alternate buy out financing by PEs, and increased capital market activity - both volume and value will clearly be on an uptrend here," Mehra said.

Moreover, visibility of economic growth and reforms will push domestic corporates to look at inorganic growth means, it said.

"Government's actions on key policy issues and reforms like GST, the new Companies Act, ITP for Tech start-ups, land acquisition, unblocking stalled projects should improve the 'ease of doing business' in India. This therefore may further accelerate the transaction activity in India," Mehra added.