India Inc's Q1 deal tally declines to $20.4 billion

NEW DELHI: Corporate India announced deals worth $20.4 billion in the first quarter of this calender year, a tad lower than $21 billion in the year-ago period, global consultancy firm Grant Thornton said.

The first quarter of 2012 witnessed deals worth $20.4 billion, out of which M&A was $18.27 billion, PE was $2.01 billion and qualified institutional placements worth $0.1 billion, the Grant Thornton report said.

Though in terms of value there has been a decline, in terms of number of deals there has been an increase as 297 deals were announced, while in the year ago period 219 transactions were announced.

"This quarter was dominated by two large domestic mergers (Sesa Goa-Sterlite - $12.7 billion and Tech Mahindra-Satyam - $1.4 billion). In the PE space, sectors like e-commerce and domestic sectors focused on Indian consumptions story are attractive for investors," Grant Thornton India LLP Partner, Transaction Advisory Services Raja Lahiri said.

Lahiri further cautioned the "recent Budget amendments proposed on the Vodafone issue is likely to impact deal sentiments and may potentially lead to re-pricing of deals and delay in deal closures, especially, larger deals".

Finance Minister Pranab Mukherjee in his Budget has proposed amendments in the Income Tax Act with retrospective effect from 1962 to bring into net overseas deals concerning domestic assets. The first quarter of 2012 saw a drop in cross-border deal activity, both inbound and outbound but domestic M&A witnessed an increase on the back of 2 large deals, namely, Sesa Goa's merger with Sterlite and Tech Mahindra's merger with Satyam.

Total value of outbound deals, wherein Indian companies acquired businesses outside India in the first quarter of 2012 was $0.7 billion as compared to $1.7 billion in the corresponding period a year ago, the report said.

The total value of inbound deals, where foreign companies or their subsidiaries acquired Indian businesses in the January March period was $1.3 billion as against $13.8 billion in the corresponding period a year ago.

PE deal values amounted to $2 billion by way of 118 deals in the first quarter of this year as compared to $2.6 billion via 75 transaction in the year ago period.

"In the PE space, sectors like e-commerce (Flipkart raising PE Funding of $150 million) and domestic sectors focused on Indian consumptions story are attractive for investors (Godrej PE fund raise form Temasek - $137 million)," Lahiri said.