M&A and PE deals rise 34% so far this year
The year was dominated by e-commerce (23%) and real estate (17%) sectors with the two sectors witnessing billion-dollar investments
India Inc sealed deals (M&A and PE) worth $47.8 billion in 2017 so far, up 34 per cent year-to-date (YTD) and recording a six-year high in terms of deal values primarily driven by big-ticket transactions.
Notwithstanding the significant rise in deal value, the number of transactions, however, declined to 882 from 1,142 recorded YTD 2016, according to Grant Thornton India LLP.
In spite of uncertainty among PE investors on the impact of GST on potential investee companies, the deal activity exhibited tremendous resilience with a 74 per cent growth compared to the corresponding period previous year, said Prashant Mehra, Partner at Grant Thornton India LLP.
Compared to the previous quarter, overall deal value for this quarter witnessed 36 per cent increase, while volumes declined 29 per cent. The growth in deal value was mainly driven by big ticket PE investments. Thirty-two deals valued at and over $100 million, accounting for 70 per cent of total PE values, have been sealed in 2017 YTD.
Compared to August 2017, deal activity in September 2017 declined with over 4x times fall in the deal values due to the absence of billion- dollar deals. Volumes remained muted.
The year was dominated by ecommerce (23%) and real estate (17%) sectors with the two sectors witnessing billion-dollar investments. On the other hand, startup sectors continued to drive the PE volumes with over 330 investments worth $2 billion capturing 60 per cent of PE volumes.
Mehra said private equity investments recorded their highest ever deals at $15 billion. The record-breaking value figures, however, have been accompanied by a fall in terms of deal volumes by 24 per cent over levels seen in the same period last year. Despite speculation that deal activity may slow down with fund managers taking a cautious approach towards fresh funding, value of private equity investments jumped by 74 per cent this year compared to the corresponding period in 2016.
The reason for this significant jump in value is attributed to over 30 big-ticket investments that were valued at and over $100 million compared to only 20 such deals executed in the same period last year.
Increasing efforts by the Government to ease GST transitioning and other ease of doing business in India initiatives like The Code on Wages Bill 2017, is expected to boost investment sentiment, enabling companies to tap markets for fundraising, he added.
While the recently concluded quarter has concluded on a tepid note, mainly because of the effects of GST, the last quarter of 2017 is expected to end on a high note and 2018 is expected to emerge even stronger demonstrating significant growth in transaction activity.
This growth will be fuelled by the upward looking economy for domestic M&A powered by PE as well as growing transaction on inbound transactions. All this will perhaps be an outcome of the several reforms the Government has initiated in the last 3 years and the positive effect of that now coming out end 2017-beginning 2018, said Mehra.