PE deals see a surge, while M&A slows down in H1 2015

While deal value grew by almost 40%, M&A activity dropped to a three-year low, according to the Grant Thornton India Llp Dealtracker


On the PE front, several large ticket deals were reported such as DST Global’s investment in Olacabs for $400 million. Photo: Hemant Mishra/Mint
On the PE front, several large ticket deals were reported such as DST Global’s investment in Olacabs for $400 million. Photo: Hemant Mishra/Mint

Mumbai: Private equity (PE) deal activity continues to see a surge, with deal value growing by almost 40% in the first six months of the year, even as mergers and acquisitions (M&A) activity dropped to a three-year low, according to the Grant Thornton India Llp Dealtracker.

The first six months of 2015 saw PE deals worth $7.1 billion (462 deals), as compared to PE investments worth $5.1 billion (285 deals) in the same period last year, said Grant Thornton’s report.

“It (PE deal activity) has seen substantial growth in terms of volume and value, even though average deal size has reduced due to the ripple effect created by the e-commerce boom and increased investor interest in start-ups,” the report said.

On the PE front, several large ticket deals were reported such as Carlyle Group’s investment in Magna Energy Ltd ($500 million), DST Global’s investment in Olacabs ($400 million) and Apax Partners Llp’s investment in Shriram City Union Finance Ltd ($371 million).

The information technology (IT) and IT-enabled services (ITeS) sector topped the charts in terms of contribution to PE deal value (38%) and volume (56%).

However, strategic M&A deal value in the first six months of 2015 dropped for the first time since 2012 to $15.8 billon (277 deals) from $17.1 billon (269 deals), which implies reduction in ticket size of M&A deals.

“In-bound deals have increased in terms of value and decreased in terms of volume while outbound deals have not witnessed too many big ticket deals, as volumes have increased while deal values have decreased,” the report said.

In-bound M&A deals grew to $7.4 billion (62 deals) from $4.8 billion (88 deals) in the first half of 2015. The period witnessed many big-ticket in-bound deals, with 11 deals valued over $100 million each and the top five deals accounting for 59% of total in-bound value.

The top three M&A deals reported in the first half of the year include the merger of Vedanta Ltd and Cairn India Ltd ($2.3 billion), Centerbridge Partners’ acquisition of Suzlon’s Senvion SE ($1.2 billion) and Enterprise Products Partners Ltd’s acquisition of Reliance Industries Ltd’s Eagle Ford Shale ($1.07 billion).

The energy and natural resources sector contributed 27% of deal value, while IT and ITeS came second at 18%.

“Last year witnessed a resurgence in the business environment on expectations of economic revival after the elections, with over 1,178 deals worth over $49.8 billion. Keeping up with the momentum, this year has got off to a promising start with 739 deals at over $22.8 billion,” said Harish H.V., partner at Grant Thornton India.

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