India’s Overall M&A Activity Up 12.3% from First Half 2012: Thomson Reuters

thompson reutersThe value of announced mergers & acquisitions (M&A) deals involving Indian companies reached US$20.1 billion, a 12.3% increase from the first half of 2012. In the second quarter of 2013, overall Indian M&A totaled US$15.3 billion, a 214.3% sequential increase from the first quarter of 2013 driven by a US$5.4-billion pending acquisition of Hindustan Unilever Ltd by Unilever PC of UK. The average M&A deal size for transactions with disclosed values involving India climbed up to US$82.8 million so far this year, as more deals were announced above US$1-billion in value, compared to US$73.1 million during the first half of 2012.

Domestic M&A stood at US$2.3 billion, down 68.3% compared to the same period last year, the lowest first half-level since 2004 (US$1.2 billion). The bulk of domestic activity focused on the Financials sector with US$657.3 million, down 69.4% from the same period last year, but nonetheless captured 28.3% of India’s domestic M&A activity this year. Total cross-board M&A grew 70.8% to US$17.0 billion compared to the first half of 2012 as inbound and outbound M&A activity increased 32.4% and 294.5%, respectively, from the comparative period in 2012.

Completed M&A deals involving Indian companies totaled US$12.0 billion, a 16.9% growth from the first half of 2012.

Consumer Staples Captured 28.2% of Market Activity

The Consumer Staples accounted for majority of the acquisitions involving Indian companies with 28.2% market share worth US$5.7 billion, up 435.2% from the same period last year. Driven by UK-based Unilever PLC’s pending tender offer to raise its interest in Hindustan Unilever Ltd by acquiring a 22.52% stake for a total value of INR 292.202 billion (US$5.4 billion), the Consumer Staples sector witnessed its best ever semi-annual volume. This is biggest deal on record for Consumer Staples involving Indian companies. Meanwhile, Industrials and Energy & Power sectors also witnessed a significant rise in deal value with a triple-digit percentage increase each, and captured 19.6% and 15.7% of the market share, respectively.

Private Equity-backed M&A in India Dropped 49% – Lowest since 2004

Buyside Financial Sponsor M&A activity targeting Indian companies totaled US$834.5 million, a 49.0% drop from the first half of 2012 and witnessed its slowest start to a year since the first half of 2004 when volume fell to US$661.1 million.

The Materials sector accounted for 42.0% of private equity-backed M&A activity in India with US$350.2 million, more than a 14-fold increase from the comparable period last year as the number of private equity-backed M&A deals in the sector increased five-times this year over last year’s first half period.

India Inbound M&A Activity Improved 32.4%

Foreign firms acquiring Indian companies so far this year recovered as deal value increased 32.4% to US$11.2 billion from the same period last year, and witnessed the strongest start to a year since 2011 (US$17.5 billion).

The bulk of inbound acquisitions focused on the Consumer Staples in terms of deal value and captured 50.0% of India’s inbound M&A activity with US$5.6 billion, a fifteen-fold increase from the first half of 2012.

United Kingdom-based Unilever PLC launched a tender offer to raise its interest in Hindustan Unilever Ltd by acquiring a 22.52% stake for a total value of INR292.2 billion (US$5.4 billion). The deal bolstered acquisitions in India from United Kingdom firms to reach US$5.8 billion, the highest first-half volume since 2011 (US$9.9 billion). United Kingdom accounted for 51.3% of India’s inbound M&A activity in terms of deal value. Meanwhile, United States saw the most number of deals with 45 announced transactions worth US$2.6 billion.

India Outbound M&A Grew 294.5% YTD

Indian acquisitions overseas surged 294.5% to US$5.8 billion after witnessing a slow start during the first half of 2012 (US$1.5 billion), and witnessed its highest first half level in terms of deal value since 2010 (US$21.0 billion).

The Industrials sector captured 45.6% of the market activity as deal value grew 17-times to US$2.6 billion from the first half of 2012 (US$151.8 million). Energy & Power followed closely and accounted for 43.0% of India’s outbound acquisitions with US$2.5 billion worth of deals.

United States was the top most targeted nation in terms of value and number of deals with 46.6% market share worth US$2.7 billion from 14 announced deals. Mozambique accounted for 43.0% from a single deal worth US$2.5 billion.

Completed M&A Advisory Fees in India Up 20.5%

According to estimates from Thomson Reuters/ Freeman Consulting Co., M&A advisory fees from completed transactions in India totaled US$55.4 million during the first half of 2013, a 20.5% increase from the comparable period in 2012.

Citi took the top spot on M&A fee rankings for advisory work for completed M&A deals in India so far this year with US$14.6 million, and accounted for 26.3% market share of the fee pool.