Mergers and Acquisitions Activity Records 70 % Growth in 2018: Study

As per the study, In India, from 2015-2019, Mergers and Acquisitions (M&A) activities has been buoyant with over 3,600 steady deals pipeline with an aggregate value of more than US$ 310 billion.

Between 2015 to 2016, large deals have been doubled in value to US$ 23 billion and again doubled to US$ 56 billion between 2017-2018. In 2018, 70 per cent growth has been recorded by M&A activities, driven by distressed deals enabled by the corporate insolvency resolution process under the Insolvency and Bankruptcy Code (IBC), it according to a Confederation of Indian Industry (CII) and other sources.

“M&A activity report of 2019” by Bain & Co. focused on 60 largest transactions by strategic investors in India between 2015 and 2019, each valued at more than $250 million (referred as large deals).

The total deal value of these large deals during this period stood at $120 billion. The deal size also grew during this period, averaging $0.7 billion in 2015 to more than $2.6 billion in 2017 and 2018. In addition, deal volume has been promising across the sectors, with industrial goods, energy, and telecom and media representing more than 60 per cent of deals by volume and value.

The largest deals took place in the energy and technology sectors. Despite recent economic slowdown, the India story during this timeframe has been a significant driver of M&A.

The IBC’s continuous efforts have been crucial as a mechanism for price discovery and recovery of distressed assets which accounted for about 70 per cent of the growth in deal value in 2018 from 2017. Airtel’s acquisition of Tata Teleservices (2019) and Telenor assets (2018) and UltraTech Cement’s acquisitions of Jaypee Cement (2017) and Binani Cement (2018) are examples of large players consolidating their positions.

In 2018, non-distressed deals grew at 20 per cent from 9 per cent of large deal volume in 2015. The examples of these include Walmart’s big bet on India with Flipkart and IHH Healthcare Bhd’s bid for Fortis Healthcare.

Source: IBEF

Image Courtesy: UOB Bank