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M&A Values Decline 78% In Oct ’17

As many as 35 M&A transactions were sealed worth $3.7 billion in October 2017, as against $17.3 billion spread across 45 deals in October last year. The decline in value is primarily due to the absence of big ticket transactions

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The merger market seems to be shrouded in uncertainty on account of economic reforms such as GST and the bankruptcy code as India Inc takes a cautious approach towards big ticket investments.

Data available with Grant Thornton India shows a huge dip in figures pertaining to mergers and acquisitions (M&A) in October 2017. Research conducted by the assurance, tax and advisory firm reveals that as many as 35 M&A transactions were sealed worth $3.7 billion in October 2017, as against $17.3 billion spread across 45 deals in October last year. The decline in value is primarily due to the absence of big ticket transactions.

Prashant Mehra, Partner at Grant Thornton India said sentiments are subdued since the “industry is busy dealing with the implementation issues around GST.”

So far this calendar year, only 3 deals have been clocked in the billion dollar category, and 34 transactions estimated and valued at and above $100 million compared to 8 billion dollar deals and 37 deals valued at and over $100 million executed between January and October 2016. In terms of total deal activity, M&A and PE in this calendar year saw a marginal increase of 3 per cent in deal values recording deals worth $53 billion, while volumes declined by 24 per cent.

As per experts within the industry, this is a temporary blip. “With India gaining 30 positions up on the Ease of Doing Business, the reforms around uplifting this ranking further, the effects of past reforms finally showing a positive impact on the economy and the stock market gradually ticking upwards, transactions should now start to inch upwards,” said Mehra. “While we will hopefully end 2017 on a high note, traction will perhaps be concentrated around core sectors,” he added.

Some of the big ticket transactions in October 16 include Rosneft PJSC, Trafigura and United Capital’s acquisition of Essar Oil.

"Long term growth prospects remain intact. The current volatility is on expected lines and is caused by the lumpiness in the economy,” said Rahul Bhasin, Managing Partner at Baring Private Equity. Once the uncertainty subsides, India Inc will continue to take bolder steps.

In October 2015, as many as 55 deals were closed in the merger market worth $3,090 million.


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