India Inc M&A deals up 12% at $15.7 bn in first half of 2016

Corporate India's merger and acquisition deal activity rose by 12 percent to USD 15.7 billion in the first half of the year largely driven by domestic investor interest.

According to assurance, tax and advisory firm Grant Thornton, India Inc's M&A deals witnessed 12 percent rise in deal value to USD 15.7 billion in the first half of this year, inspite of a 5 percent fall in number of deals compared with January-June period last year.

"This growth was primarily driven by domestic and outbound transactions, which together increased by over 1.6 times as compared to 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 at Grant Thornton India LLP said.

Crossborder transactions in the first half included USD 3.9 billion worth of inbound deals and USD 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.

Regarding the rise in outbound deal values, the report said the increase indicates strong domestic investor optimism in the global market.

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

"Domestic M&A space was dominated by consolidation among startups (accounted for 25 percent of total M&A volumes) in an effort to strengthen their market positions in an increasingly competitive market," Mehra said.

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 (USD 2.4 billion) and Birla-Reliance Cement (USD 0.7 billion).

Meanwhile, the IT-ITeS space was dominated by outbound transactions with domestic players in the segment increasingly expanding to global markets, Grant Thornton's half yearly Dealtracker report said.