Home / Companies / Start-ups /  M&A deals more than halve to $41.6 bn in January-June

MUMBAI : Overall mergers and acquisitions (M&A) in India, which hit a record high in the first half of 2018, more than halved to $41.6 billion in the first half of 2019 as both domestic and cross border deals declined, according to Refinitiv, a financial market data provider owned by Blackstone and Thomson Reuters.

Cross-border M&A deals witnessed a steep fall with a slowdown in inbound M&A transactions, which recorded a 64.5% fall to $14.3 billion in the first six months of the calendar year, compared to the corresponding period last year.

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Most investments that flowed into India came from the US, which alone accounted for 26.3% of all inbound deals, followed by Japan, which stood at 12.3%, and China at 10.5%.

Indian corporates bought fewer foreign companies, leading to outbound M&A deals declining 42.6% to $1.7 billion in H1. The US remained the top market in terms of value as well as number of acquisitions from Indian companies, with 26 deals worth $665.4 million, representing a 39.7% market share.

Domestic M&A activity, too, saw a steep decline of 42.1% in value to $24 billion, compared to the first half of 2018.

Deal activity in the financial space was the highest with a market share of 33%. The total M&A deal value in the financial sector stood at $13.7 billion, up 7.2% from the year-ago period. This was followed by energy and power, which had a 13.5% market share worth $5.6 billion, but witnessed a 54.5% decline in value compared to the first half of 2018. Technology was among the top three sectors with a 12.7% market share in M&A deals, worth $5.3 billion, up more than two-fold from the year earlier.

In the financials space, the top two deals include Bandhan Bank Ltd’s pending merger with Gruh Finance Ltd for $3.2 billion in a stock swap transaction. This is also the largest-ever transaction involving India in the financial sector, Refinitiv said.

Power Finance Corp. Ltd’s acquisition of a majority stake in Rural Electrification Corp. Ltd from the government of India for $2.1 billion was the second highest deal announced in the first half of 2019.

The Indian M&A league table was topped by investment banking firm JM Financial Group with a 9% market share amounting to $3.8 billion in related deal value, according to Refinitiv. Kotak Mahindra Bank Ltd came a close second with an 8% market share, followed by Ambit Corporate with 6.2%.

While the M&A space showed a slowdown, primary bond offerings from Indian issuers hit a record high at $45.4 billion in the first half of 2019, making it the strongest semi-annual period on record. The increase in bond offerings was largely dominated by the financial sector, which held 66% of the market share amounting to $30 billion, from $17.8 billion during the same period last year.

State Bank of India launched the largest bond issuance from an Indian issuer so far this year, amounting to $1.2 billion, through its London branch. Vedanta Resources also sold a $1 billion dual-tranche high yield bond.

The equity capital markets also soared to a four-year high with companies raising $13.2 billion so far this year, showing an increase of 28.7% in proceeds from the comparable period in 2018, and the highest first half period since 2015 ($13.7 billion).

This was mainly on the back of higher follow-on offerings, which accounted for 88.8% of India’s overall equity capital market’s proceeds, growing 76% from a year ago to $11.7 billion so far this year, the highest first half period since 2015. This was driven by the rights offering by Indian companies to raise $7.2 billion till date, and accounted for 61% of India’s equity capital markets proceeds. India’s biggest rights offering on record was Vodafone Idea’s $3.6 billion and Bharti Airtel’s $3.5 billion transactions.

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