Value of M&As involving Indian companies jumps 63% to $7.8 billion in Q1

The total value of M&As involving Indian companies surged nearly 63% to $7.8 billion in the first three months of 2016, primarily spurred by big-ticket disinvestment transactions, says a report.

"The aggregate disclosed deal value rose significantly by 63% as compared to the same period last year ($4.8 billion in Q1 of 2015)," consultancy EY said on Wednesday.
In the quarter ended March this year, there were 245 deals announced as against 219 in the year-ago period.

Domestic M&As dominated deal activities in the quarter ended March 2016, with 149 deals having a cumulative disclosed value of $5.2 billion, EY said in a release.

"This surge in deal value can be primarily attributed to the quarter's two largest divestment deals: Jaiprakash Associates which entered into an agreement to sell six of its cement units to UltraTech for $2.4 billion, and Reliance Infra which agreed to sell its cement division to Birla Corp for $710.7 million," it noted.

Out of the total transactions announced in the three months ended March this year, 67% were domestic ones while in terms of volume, 33 were in the technology sector.

"The strong deal activity was driven mainly by domestic M&A. Big-ticket divestment deals were a significant contributor, reflecting Indian corporates' focus on deleveraging their balance sheets by disposing of their non-core assets," Amit Khandelwal, Partner and National Director (Transaction Advisory Services) at EY, said.

Further, EY noted that an improving domestic economy and health of public finances combined with soft commodity prices as well as accommodative government policies boosted corporate confidence, providing an impetus to the deal activity.

"Companies from the US continued to be the most active counterparts for Indian companies in the cross-border transactions. During the quarter, players from the US were involved as acquirers in 10 in-bound deals and as targets in 15 out-bound transactions", it added.