May 04, 2012 11:43 AM IST | Source: CNBC-TV18

PE, food & domestic consumption lead dull M&A season

Raja Lahiri, partner, transaction advisory services, Grant Thornton India, spoke to CNBC-TV18 about the findings of the monthly report on the M&A deals in April

Grant Thornton has released its monthly report on the state of  M&As in the country.There was a reduction in total deal values in April 2012 saw compared to the year-ago period. Raja Lahiri, partner, transaction advisory services, Grant Thornton India, spoke to CNBC-TV18 about the findings of the report.

Below is an edited transcript of the interview on CNBC-TV18. Also watch the accompanying video.

Q: The number of deals seems to have been more or less the same, but there has been a reduction in deal values for April?

A: I think the sentiment of the market has moderated quite currently. There have been no large deals in the domain as compared to the previous year when there were large multi-billion deals like the Cairn-Vedanta deal and the Reliance-BP deal.

Q: But there were quite a few deals that were in focus for April. Could you run us through the top few deals?

A: In the financial services sector, especially in the insurance segment, the Mitsui Sumitomo deal with Max New York Life Insurance was worth USD 530 million. That’s a large transaction.

Then there was a very interesting deal in the food sector where India Hospitality Corp bought Adelie Food in the UK for USD 350 million. In the domestic segment, Aditya Birla Nuvo  bought a stake in the apparel business of Pantaloon Retail.

As far as the private equity (PE) space is concerned, the healthcare sector has remained very attractive. Advent put USD 105 million in CARE Hospitals, ChrysCapital invested USD 50 million in Intas Pharmaceuticals and Kohlberg Kravis Roberts India (KKR) invested in TVS Logistics.

What clearly emerges, in terms of sectors is that private equity, food and domestic consumption remain attractive. The healthcare and the pharmaceutical sector will continue, in my view, to be attractive. So though there have been no top dollar deals, there has been decent activity in the midsized space.

Q: Is there a sharp difference between inbound and outbound deals in April?

A: Outbound is clearly seeing signs of moderation and in my view there is an issue of sentiment. I tend to see more of inbound transactions happening with companies from Japan, Europe and US looking at mid-sized Indian companies.

But as I said earlier, because of the overall sentiment in the market, I think the larger deals will take some time before bubbling up in the M&A scene.

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