The value of announced mergers & acquisitions (M&A) deals involving Indian companies reached US$5.2 billion during the first quarter of 2014, a 2.8% increase from the first quarter of 2013 but saw a 27.4% quarterly decline from the fourth quarter of 2013.
Deal count also slowed down as number of M&A transactions dropped 29.5% to 232 from 329 announced deals during the first quarter of 2013.
The average M&A deal size for transactions with disclosed values involving India climbed up to US$56.3 million this first quarter of 2014 compared to US$34.0 million over the same period last year., as more deals were announced this quarter at US$500-million-and-above in value.
Domestic M&A stood at US$2.7 billion, up 111.2% compared to the first quarter of 2013. In terms of value, the bulk of domestic activity focused on the Energy & Power sector with US$1.9 billion, an eleven-fold increase from the same period last year and witnessed the highest quarterly level since third quarter of 2010 (US$2.7 billion). Energy & Power captured 71.3% of India’s domestic M&A activity this year.
Total cross-board M&A fell 38.7% to US$1.9 billion compared to the first quarter of 2013. Inbound M&A in India declined 49.4% while, on the other hand, Outbound M&A increased 57.2% over the same period last year.
Completed M&A deals involving Indian companies totaled US$8.4 billion, a 37.0% increase compared to the first quarter of 2013 (US$6.2 billion).
Energy & Power Takes the Lead with 50.7% Market Share
The Energy & Power sector accounted for majority of the acquisitions involving Indian companies with 50.7% market share worth US$2.6 billion, a 299.7% increase from the first quarter of 2013, and the highest first quarter period since 2011 (US$9.4 billion). Materials followed next and captured 15.9% of the market share with US$824.6 million worth of deals, up 186.7% from the same period last year.
The TMT sector (Technology, Media, and Telecommunications) captured an aggregate market share of 7.7% as combined deal value increased 52.1% to US$398.0 million from the first quarter of 2013.
Private Equity-backed M&A in India Witness Surge in Deal Value
Buyside Financial Sponsor M&A activity targeting Indian companies totaled US$2.2 billion this year, and witnessed an eleven-fold increase in value compared to the first quarter of 2013. This was driven by an acquisition of Jaiprakash Power Venture Ltd’s two hydro power plants by an investor group comprised of TAQA India Power Ventures Pvt Ltd (51%), INDO- AFRICA Inc (39%) and India Infrastructure Fund II (10%) in a deal valued at US$1.6 billion. The deal also pushed the Energy & Power sector to account for 76.2% the private equity-backed M&A activity in India. Consumer Products & Services followed second with 12.1% market share.
India Inbound M&A Activity Starts Slow; Down 49.4% from 1Q 2013
Foreign firms acquiring Indian companies reached US$1.4 billion this year, a 49.4% decline from the first quarter of 2013. Number of announced deals slipped 12.8% compared to the same period last year.
The bulk of inbound acquisitions focused on the Consumer Products & Services sector in terms of deal value with US$417.9 million worth of transactions, a 767.0% growth over a year ago. Consumer Products & Services captured 29.3% of India’s inbound M&A activity followed by Energy & Power sector with 18.8% market share.
Singapore is currently the top acquirer of Indian companies in terms of value with US$371.4 million from 9 announced deals, and accounted for 26.0% of India’s inbound M&A activity. Meanwhile, United States saw the most number of deals with 13 announced M&A transactions worth US$218.6 million.
India Outbound M&A Grew 57.2% YTD
After witnessing a slow start last year (US$316.5 million), Indian acquisitions overseas stood at US$497.6 million during the first quarter of 2014 and saw a 57.2% increase from the comparative period last year.
India’s outbound acquisitions focused on the Energy & Power sector as deal value reached US$411.1 million, and captured 82.6% of India’s foreign acquisitions. Healthcare followed in second place with 8.2% of the market share, or US$40.7 million worth of announced M&A deals.
Mauritius was the top most targeted nation in terms of value which accounted for 67.6% of the market share worth US$336.3 billion from a single deal. United States, however, saw the most number of announced transactions with 10 deals valued at US$9.1 million.
Completed M&A Advisory Fees in India Up 51.0%
According to estimates from Thomson Reuters/ Freeman Consulting Co., M&A advisory fees from completed transactions in India totaled US$49.8 million during the first quarter of 2014, a 51.0% increase from the comparable period last year.
Bank of America Merrill Lynch took the top spot for imputed fee rankings on M&A advisory work related to completed M&A deals in India for the first quarter of 2014 with US$15.9 million, and accounted for 31.9% market share of the fee pool.