India M&A Reached All-time High and Surpassed 2007 Annual Record

The value of announced mergers & acquisitions (M&A) deals involving Indian companies reached US$125.2 billion so far this 2018, a 98.1%increase in value, surpassing the annual record set in 2007 (US$67.4 billion).Number of announced deals grew 9.3% from a year ago and witnessed the busiest annual period since records began in 1980.

The average M&A deal size for transactions with disclosed values increased to US$132.8 million in 2018 compared to US$82.9 million over the same period last year. India-involvement M&A activity this year witnessed five mega deals above US$5 billion (with a combined value of US$39.8 billion)compared to only one during the same period last year (when the US$11.6 billion Idea-Vodafone merger was announced). 

Domestic M&A hit record levels with US$55.4 billion, double the value from over a year ago, and surpassed annual all-time high in 2017 (US$ 26.7 billion). Number of announced domestic deals saw the busiest year, up 10.0%from last year.  Total cross-border M&A reached US$67.1 billion, up 96.6% from last year. Inbound M&A activity increased 70.6% from a year ago,while Outbound M&A activity grew five-times in value from last year.

Completed M&A deals involving Indian companies totaled US$ 81.2 billion, up 33.8% in deal value compared to 2017 (US$60.7 billion).

Materials Captured 22% Market Share

The Materials sector accounted for majority of the acquisitions involving Indian companies with 22.1% market share worth US$27.7 billion, more than a ten-fold increase in deal value compared to 2017, making it the highest-ever period for the sector in terms of value.  Three deals above US$3-billion targeting materials sector involving India were announced this year.

Financials placed second with 15.4% market share as deal value reached US$19.3 billion, up 70.0% in value from a year ago.  Indian state-owned Life Insurance Corp of India (LIC) planned to raise its interest to 53.308%,from 8.967%, by acquiring 44.34% stake in state-owned IDBI Bank Ltd (IDBI) fora total of USD 2.804 billion. Concurrently, LIC planned to launch a tender offer to raise its interest to 80.484%, from 53.308%, by acquiring 27.176%stake in IDBI.

Retail sector took third spot with US$18.3 billion worth of transactions, a triple-digit percentage increase in value from a year ago. In May, Walmart Inc based in the United States acquired a 77% interest in Flipkart Group, a provider of online ecommerce retail services, from Softbank VisionFund LP, a unit of SoftBank Group Corp, and Naspers Ltd, for US$16.0 billion(INR 1.074 trillion). The deal is currently the largest-ever M&A transaction involving India, and the biggest Asia Pacific Retail M&A deal on record.

Private Equity-backed M&A in India Up 45% in 2018 YTD

Buyside Financial Sponsor M&A activity targeting Indian companies totaled US$11.0 billion in 2018, a 45.0% increase in deal value compared to 2017 and saw the highest-ever annual period. Private equity-backed M&A in India’s Healthcare sector accounted for 15.2% of the market share worth US$1.7 billion, up 147.8% in value from a year ago.  Financials followed closely behind with 15.1% market share.  

India Inbound M&A Beats Annual Record in 2017

Foreign firms acquiring Indian companies reached US$53.8 billion in 2018, a 70.6% increase in deal value after surpassing annual record volume in 2017 (US$31.5 billion).

US-based Walmart Inc’s acquired Flipkart Group, a provider of online ecommerce retail services, from Softbank and Naspers Ltd, for US$16.0 billion.The deal pushed the Retail sector up to capture 32.3% of India’s inbound M&A activity for a total of US$17.4 billion, a significant increase compared to last year (US$1.7 billion).  Materials and Healthcare sector followed behind with 17.3% and 13.1% market share, respectively.

The United States is currently the top acquirer of Indian companies interms of value and number of announced deals. United States acquisitions inIndia totaled US$22.6 billion, up 272.0% from a year ago, and accounted for 42.0% of India’s inbound M&A activity.  Luxembourg, United Kingdom and Canada followed behind with 12.7%, 9.4% and 7.6% market share, respectively.

India Outbound M&A Hits 8-Year High

Indian acquisitions overseas stood at US$13.3 billion so far this year,a 413.3% increase in value from last year, as number of outbound deals grew 4.5% compared to 2017. This is the highest annual period for India outbound M&A since 2010 (US$29.1 billion).

India’s outbound acquisitions focused on the Materials sector as deal value reached US$7.6 billion, and captured 57.2% of India’s foreign acquisitions. High Technology followed and took second place, accounting for 16.2% market share as deals totaled US$2.1 billion. Healthcare rounded out thetop three with 10.7% market share worth US$1.4 billion.  UPL Corp Ltd,ultimately owned by UPL Ltd, definitively agreed to acquire the entire share capital of Arysta Life Science Ltd, from Platform Specialty Products Corp, for an estimated US$4.2 billion.

The deal bolstered United States as the top most targeted nation interms of value with 52 deals worth US$10.4 billion, or 78.1% market share.United Arab Emirates took second place with 6.8% market share. United Kingdom accounted for 3.7% market share of India’s outbound activity.

Completed M&A Advisory Fees in India Up 11.7%

M&A advisory fees from completed transactions in India totaled US$283.6 million in 2018, an 11.7% increase from last year.  Goldman Sachs currently takes the lead in the imputed fee rankings on M&A advisory work related to completed M&A deals in India for 2018 with US$74.2 million,capturing 26.1% market share of the fee pool.