M&As decline in the first half of 2008
Total volume of M&A and PE deals in the first half of 2008 stood at Rs 92, 800 cr, down from Rs 1,09,700 cr during the same period last year. Gainers & Losers
By PTI |
NEW DELHI : India Inc seems to have slowed down on deal-making with the value of its merger, acquisition and private equity transactions declining by over 15 per cent in the first half of this year, according to a domestic investment banking major.
Total volume of M&A and private equity deals in the first half of 2008 stood at Rs 92, 800 crore, down from Rs 1,09,700 crore during the same period last year, a top official of Religare Capital Markets said on Thursday.
The number of deals also declined to 388 in first half of 2008 from 423 during the same period last year Religare Capital Markets President (Group M&A) Kiran Vaidya said here at a conference organised by Dun and Bradstreet.
He said the average deal size also decreased from Rs 260 crore in 2007 to Rs 240 crore in 2008.
However, the verdict is still out on whether companies are shying away from venturing in the overseas markets, he said, adding that the recent trends also show companies are going in for acquisitions that are much bigger compared to their own size such as Tata Steel acquiring Corus.
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Even beyond the first half of the year, there have been deals like Infosys acquiring UK-based Axon, while in the first six months Tata Motors acquired Land Rover and Jaguar among others deals.
Various factors like increased global competition, concentration of companies to achieve economies of scale, capital raising opportunities etc are major drivers in growth of M&As, Vaidya said.
Also, the promoters are willing to dilute or sell off their stakes to strategic partners in order to maximise shareholders wealth, he said, adding this is certainly a good trend for the industry going forward.
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