Merger & acquisition deals up as Indian companies look abroad

Industry:    July, 2016

MUMBAI: Merger & acquisition (M&A) deals involving Indian companies increased 82% in the first half of 2016 at $27 billion in the first half of 2016, the highest in the first six months in any year since 2011 led by a four and a half time increase of Indian acquisitions abroad at $4.5 billion, data released from Thomson-Reuters said.

Outbound acquisitions by Indian companies were mainly from the energy & power sector with a deal value of $2.2 billion making up for 48.8% of acquisitions by Indian companies in terms of value. Healthcare, materials, and financials were the other sectors where Indian companies were active in M&A.

Inbound M&A, however, declined 31%, the lowest since 2012 at just $5.4 billion in first six months of 2016, with transactions focusing on high technology sector in terms of deal value with US$1.6 billion worth of transactions, a three and a half times increase over a year ago. High technology sector made up 29.5% of the inbound M&A transaction followed by industrials and healthcare.

Indian companies mostly targeted Russia for their outbound M&A with three deals worth $2 billion. However, in terms of a number of deals the US was higher with 25 transactions amounting to $598.6 million.

The US was also the top acquirer of Indian companies in terms of value and number of deals with $1.6 billion from 41 announced transactions and accounted for 29% of India’s inbound M&A activity. Canada and Germany rounded out the top three most active acquirer of Indian companies in terms of value and captured 11.5% and 10% market share, respectively.

Advisory fees from M&A transactions fell 5.2%, totalling $59 million in the first half of 2016. Ernst & Young took the top spot for fees, making $8 million, and accounted for 13.6% market share of the fee pool.