Slow start in January for deal street; sees over 48 per cent decline

NEW DELHI: Corporate India's shopping spree witnessed a significant decline in the first month of the new year as the total M&A and PE deal value for January stood at $ 1.16 billion, a fall of over 48 per cent from the corresponding period last year, a report says.

According to assurance, tax and advisory firm Grant Thornton, the total M&A, and PE deals in the month of January 2013 were valued at $ 1.16 billion through 74 deals as compared to $ 2.26 billion by way of 93 deals.

Notwithstanding the decline both in terms of number as well as total value of deals, the outlook appears bullish as the M&A activity is likely to pick up, especially around sectors like aviation, retail and media.

"Despite the slow start to the Deal Street in January, we are hopeful that there will be lot more action as we proceed. We believe that M&A activity will pick up especially around sectors like aviation, retail and media," Grant Thornton India LLP Partner, Transaction Advisory Services Raja Lahiri said.

Lahiri further added that inbound transactions are likely to gain momentum going forward.

Outbound deals were the flavour of the month as the total value of outbound deals, wherein Indian companies acquired businesses outside India in January 2013, stood at $ 0.13 billion by way of 9 deals. In the corresponding period a year ago, deals worth $ 0.06 billion were struck through the same number of transactions.

The total value of inbound deals, wherein foreign companies or their subsidiaries acquired Indian businesses in January 2013, was at $ 0.09 billion through 11 deals as compared to $ 0.85 billion by way of 12 deals a year ago.

The total value of domestic deals improved slightly as it stood at $ 0.65 billion (17 deals) as compared to $ 0.53 billion (20 deals), in the corresponding period a last year.

The top five M&A deals accounted for 75 per cent of the total deal values. Key M&A deals included NTPC's acquisition of Nabinagar Power Generating Co ($ 413 million) and Exide Industries acquiring 50 per cent stake in ING Vyasa Life Insurance ($ 100 million).

Meanwhile, private equity (PE) deal values amounted to $ 0.26 billion through 32 deals in January 2013 as compared to $ 0.76 billion (37 deals) a year ago.

PE activity continued to be strong in healthcare (especially specialty hospitals space) which contributed 24 per cent of PE deal value for January 2013, followed by BFSI (22 per cent) and logistics (15 per cent).

Key PE deals included Aditya Birla PE and other PE investor's investment in Ratnakar Bank ($ 55 million) and Everstone Capital's investment in Transpole Logistics ($ 40 million).