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India Inc’s M&A Value Rises 12% in First Half of 2016 Despite Fewer Deals

The rise in outbound deal value indicates strong domestic investor optimism in the global market, Grant Thornton says.

Operations inside Tiny Owl, a food delivery startup (Photographer: Dhiraj Singh/Bloomberg)
Operations inside Tiny Owl, a food delivery startup (Photographer: Dhiraj Singh/Bloomberg)

Corporate India’s merger and acquisition activity rose 12 percent in the first half of the year, driven largely by domestic investor optimism, according to tax and advisory firm Grant Thornton.

The value of M&A deals for India jumped 12 percent to $15.7 billion even as the number of deals fell 5 percent compared the January-June period last year, says Grant Thornton’s Half Yearly Dealtracker report – H1 2016.

This growth was primarily driven by domestic and outbound transactions, which together increased by over 1.6 times as compared to the first half of 2015; contributing over 50 percent of the total deal values and over 70 percent of the total M&A deal values. 
Prashant Mehra, Partner, Grant Thornton

Crossborder transactions in the first half included $3.9 billion worth of inbound deals and $3.1 billion worth of outbound deals.

“Inbound transactions declined for the first time in six years with global investors being cautious on the outcome of the Brexit referendum and the evolving global implications,” Mehra said.

Top transactions in outbound segment were Indian Oil Corp, Oil India and a unit of Bharat Petroleum Corp’s $1.3 billion acquisition of the Tass-Yuryakh oilfield in Siberia, Russia and Wipro’s $460 million acquisition of Healthplan Services, USA.

Domestic M&A space was dominated by consolidation among startups, which accounted for 25 percent of total M&A volumes, the report says.

Top M&A sectors during first half of this year included core sectors like energy & natural resources, manufacturing and IT&ITeS that continued to dominate the M&A deals space - together accounting for 58 percent for total M&A values.

Two billion-dollar deals drove M&A values in the energy sector while the manufacturing sector saw big ticket consolidations in the cement industry with Ultratech-Jaypee ($2.4 billion) and Birla-Reliance Cement ($0.7 billion).

Meanwhile, the IT-ITeS space was dominated by outbound transactions with domestic players in the segment increasingly expanding to global markets,