M&A deal value hits 5 year high at $61.44 billion in 2016

Mergers and acquisitions (M&A) deals in the country hit a record five-year high at $61.44 billion (about Rs 4 trillion) in 2016, says a report. 

According to the latest report by News CorpVCCEdge, the number of M&A deals remained robust this year with 1,002 such transactions worth $61.44 billion.

The deal value in 2016 is not only a record five year high but is also 159% more than $23.71 billion witnessed from 995 deals in 2015, the report said.

As per the report, there were 633 domestic M&A deals amounting to $32.77 billion -- a jump of over 278%in value terms -- in 2016.

Besides, inbound deals (143) value surged over 133% this year to $18.78 billion, while outbound deals saw a 8% dip to $4.9 billion in value terms.

"The hike in the M&A deal value can be attributed to the three deals worth $27.7 billion which includes, Essar Oil, Max Life Insurance Co and Reliance Communications, Wireless Telecom Business acquisitions contributing 45%of the overall deal value," it said.

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Private equity investors unlocked investments worth $6.79 billion across 239 exits in 2016. This is nearly 17% more in value terms compared to 2015 and also is the highest in the past five years, the report said.

The year gone by was also a record year for initial public offers (IPOs) and fund raising through such issues surged to a five-year high at $4.12 billion across 93 IPOs.

"While M&A activity perked up in 2016 due to a few multi-billion dollar deals that firms struck either to slash debt or consolidate their market share, what we are seeing is the flow of angel/seed money into enterprises in sectors like fintech, healthcare, education and travel which will continue into 2017," News Corp VCCircle CEO Nita Kapoor said.

"There is a huge funding opportunity for start-ups operating in these sectors that succeed in delivering a good consumer experience," Kapoor added.

Angel and seed investors drove the deal activity during the year, contributing 57% of the total private equity (PE) investments in 2016.

"This figure stood at 32% in 2012 and has been rising every year. They accounted for 748 deals amounting to $324 million," the report said. 

The number of PE deals slumped almost 25%to 1,309 deals, while the value of such transactions dropped by 44% to $12.38 billion, for the period under review.

"Early stage investments in start-ups has shown a significant decline of 39% to $1.59 billion in the year gone by, as compared to $2.62 billion in 2015," it noted.

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