Value Of M&A Deals In India Fell By Over 50% In July, Says Grant Thornton Report
India Inc. announced merger and acquisition deals worth $4.3 billion in July, down 52.74 percent compared to the year-ago period amid a subdued global growth and rising geopolitical tensions, a report said.
According to Grant Thornton’s monthly M&A Dealtracker, 39 M&A deals worth $4.3 billion were reported in July against 49 transactions worth $9.1 billion in the year-ago period.
“Subdued global growth, the continued Brexit-related uncertainty and the rising geopolitical tensions roiling energy prices, affected the overall deal sentiment,” the report noted.
Though valuation of M&A deals declined more than half as compared to July 2018, the month recorded significant rise in the deal valuation as compared to the previous month (June 2019), demonstrating a revival in deal sentiment among dealmakers.
“M&A transactions continued to witness a lacklustre deal activity on the back of failing to record big ticket deals witnessed during July 2018. In addition, headwinds seen in the financial services space and slowdown in the core sectors have affected the M&A deal space,” said Pankaj Chopda, director at Grant Thornton India LLP.
Accroding to Chopda, Union Budget 2019's emphasis on addressing the liquidity crisis in the NBFC sector, and constant efforts of streamlining the Insolvency and Bankruptcy Code norms, among others, are likely to boost the M&A deal activity in India.
“Though the Union Budget has laid down a roadmap for growing the economy in a sustained manner with a focus on both urban and rural sectors, the impact on deal activity will depend on the measures and policies by the government to counter the slowdown, implement/promote growth-focused investment plans and impact of global economic trends,” Chopda said.
The startup sector not only led the pack for M&A deals, both in terms of valuation and volumes, but also recorded the highest monthly values till date driven by Oyo Rooms’ $2-billion stake acquisition.
Retail, fintech, and gaming segments also remained active during the month.
July witnessed M&A deals pushed by Insolvency and Bankruptcy Code in the pharma sector, with Dhanuka Laboratories-Orchid Pharma’s $162 million deal, the report said. Others in the pipeline include the Patanjali-Ruchi Soya deal in the retail sector, and the Asian Colour-JSW steel deal in the manufacturing sector.