The rockfest on the Indian deal-street is gaining decibels. Corporate India struck deals worth $39 billion in the first two months of 2007 of which $36.8 billion were strategic mergers & acquisitions deals and the remaining $2.2 billion were private equity (PE) deals.
According to data compiled by advisory firm Grant Thornton the numbers notched up in the first two months of 2007 is almost 180% of the cumulative value of strategic M&A deals announced in 2006 calendar year. India Inc announced M&A deals worth $20.3 billion in 2006 in addition to $7.6 billion worth of PE deals.
After big bang January, when the Tatas announced the acquisition of Anglo Dutch steel maker Corus, February was a whopper, thanks to the mother of all takeovers, the $11.1 billion Vodafone-Hutchison Essar deal, and the not so big, $6 billion plus Hindalco-Novelis deal.
The multi-billion buy-outs has skewed average deals this year substantially. While the average deal size in 2006 as a whole was pegged at $42.3 million, the average for the first two months stands at $360.8 million.
As earlier, the overall M&A activity was dominated by cross border deals. Recent trends have put outbound M&A deals as higher than inbound deals, indicating greater appetite for Indian companies to acquire outside against multinationals acquiring Indian entities.
However, given the size of Vodafone-Hutch Essar deal, the overall figure is tilted in favour of inbound deals for February. For the January-February 2007 period, outbound deals continue to be a bigger driver for M&A action.
There were 19 domestic deals worth $320 million last month, where both the acquirer and the target were Indian companies. Some of the prominent domestic deals include RPG group’s buyout of Fujitsu’s stake in Zensar Technologies, Indian Tourism Infrastructure’s acquisition of Gem Tours & Travels.
After a bumper start in January, February was a relatively weak month for PE deals. After clocking 56 deals worth $1.66 billion, the highest ever in a single month, PE activity in February came down to 18 deals worth $525.7 million.
However, the average size of PE deals during the month remained intact at about $30 million. Some of the large PE deals in February involved the real estate sector. These include Citigroup’s deal with Nitesh Estates and TPG-Axon deal with DivyaSree Developers.
Source : ET