A report from data compiler Grant Thornton highlights that the total value of deals made in August this year increased by 247 percent, compared to August 2012. Raja Lahiri, Partner - Transaction Advisory Services at Grant Thornton spoke to CNBC-TV18 regarding the report.
Going forward, he believes IT sector should see some more deals due to rupee volatility. He also expects large deals in insurance sector because of the regulations that government has evolved.
Below is the verbatim transcript of Raja Lahiri's interview on CNBC-TV18
Q: A 247 percent increase in value of deals made in August year-on-year, is this base effect coming into play?
A: Yes, from a data perspective it is clearly a base effect. In the August, there were two large deals that contributed to this percentage increase. One was the ONGC deal. They took 10 percent stake in Mozambique oil field for around USD 2.6 billion which impacted the deal value.
The Mergers and Acquisitions (M&A) deal values shot up and secondly, a very important deal in the IT sector was Baring's picking up a stake of USD 400 million in Hexaware. So, these are the two large deals that really impacted the overall values in the month of August.
Q: What is your feeling as far as September is concerned? The rupee volatility will impact deal street, which sectors are more exciting at the moment?
A: The M&A private equity is connected with the overall economic sentiment. So, in terms of deal activity it has clearly gone down. If you look at numbers, 700 odd deals cumulative till August 2013 compared to a higher number last year. But if you look at rupee volatility, IT sector would see some deals happening. The earnings are getting better. Watch out for some action in that sector.
Secondly, we have seen some (deals) from the private equity side management, buyout is coming up and large deals should hopefully happen.
Third sector to watch out would be insurance because of the regulations that the government has evolved, clearly inbound large deals could happen in this sector as well.