The value of announced mergers & acquisitions (M&A) deals involving Indian companies reached US$20.5 billion in the first quarter of 2018, a 9.3% decline in value compared to a strong start in the first quarter of 2017, while number of announced deals dropped 8.3%.
The average M&A deal size for transactions with disclosed values fell to US$84.3 million during the first quarter of 2018 (compared to US$104.1 million over the same period last year when the US$11.6 billion Idea-Vodafone merger was announced).
Domestic M&A stood at US$16.0 billion, a 150.5% increase in value from over a year ago, despite a 10.9% decline in number of announced domestic deals. This is the highest first quarter period for Indian domestic M&A activity since 2006 (US$18.7 billion). Total cross-border M&A reached US$3.9 billion, down 75.6% from the first quarter of last year. Inbound M&A activity slowed down by 81.9% from a year ago, while Outbound M&A activity fell 14.3% from the comparative period last year.
Completed M&A deals involving Indian companies totaled US$14.5 billion, a 58.7% increase in deal value compared to the first quarter of 2017 (US$9.1 billion), despite a 15.7% decline in number of completed deals.
Energy & Power Captured 34% Market Share – Highest since 2011
The Energy & Power sector accounted for majority of the acquisitions involving Indian companies with 34.4% market share worth US$7.0 billion, a seven-fold increase in deal value compared to the first quarter of 2017, making it the highest start to a year for the sector since 2011 (US$9.4 billion).
In January, Indian state-owned Oil & Natural Gas Corp Ltd (ONGC) acquired a 51.1% interest in the state-owned Hindustan Petroleum Corp Ltd (HPCL), a petroleum refinery operator, for a total of US$5.8 billion (INR369.1 billion), from Government of India. The deal is currently the biggest M&A transaction involving India this year, and the largest-ever Asia Pacific petrochemical M&A deal on record.
Financials and Materials sector rounded out the top three industries and captured 24.7% and 8.8% market share, respectively.
Private Equity-backed M&A in India Up 15% in 1Q 2018
Buyside Financial Sponsor M&A activity targeting Indian companies totaled US$1.8 billion during the first quarter of 2018, a 14.7% increase in deal value compared to the first quarter of 2017, and the highest first quarter period since 2011 (US$2.3 billion). Private equity-backed M&A in India’s Healthcare sector accounted for 37.4% of the market share worth US$658.2 million, up 230.1% in value from a year ago. Retail and Financials followed behind with 20.9% and 19.5% market share, respectively.
India Inbound M&A Down 81.9% in 1Q 2018
Foreign firms acquiring Indian companies reached US$2.6 billion in the first quarter of 2018, an 81.9% decline in deal value after coming off a strong start in 2017, while number of inbound deals saw a minimum 1.1% decline.
Reco Jade Ind Pte Ltd of Singapore, a unit of GIC (Realty) Pte Ltd, agreed to acquire a 40% stake in Prestige Exora Business Parks Ltd, an Indian lessor of nonresidential buildings, a unit of Prestige Estates Projects Ltd, ultimately owned by Razack Family Trust, for an estimated US$401.5 million, in a privately negotiated transaction.
Real Estate accounted for 17.1% of India’s inbound M&A activity and totaled US$452.5 million, a significant increase compared to first quarter of last year (US$50.0 million). High Technology and Retail sectors followed behind with 17.0% and 16.6% market share, respectively.
Singapore is currently the top acquirer of Indian companies in terms of value with US$574.2 million from 9 announced deals, and accounted for 21.7% of India’s inbound M&A activity. United States took second place and witnessed the most number of inbound acquisitions in India with 31 announced deals worth US$560.2 million, and captured 21.2% market share.
India Outbound M&A Dropped 14% in 1Q 2018
Indian acquisitions overseas stood at US$1.3 billion in the first quarter of 2018, a 14.3% decline in value from the same period last year. However, number of outbound deals grew 2.2% compared to the first quarter of 2017, as deal making activity was announced in mid-market levels.
India’s outbound acquisitions focused on the Energy & Power sector as deal value reached US$600.0 million, and captured 46.9% of India’s foreign acquisitions. Materials took second place and accounted for 26.3% market share as deals totaled US$336.7 million.
United Arab Emirates was the top most targeted nation in terms of value with 3 deals worth US$936.6 million, or 73.2% market share. United States, which saw the most number of acquisitions from Indian companies, accounted for 16.6% of India’s outbound activity worth US$212.4 million from 18 announced transactions.
Completed M&A Advisory Fees in India Up 2.5%
M&A advisory fees from completed transactions in India totaled US$49.1 million in the first quarter of 2018, a 2.5% increase from the comparable period last year. Ernst & Young currently takes the lead in the imputed fee rankings on M&A advisory work related to completed M&A deals in India for the first quarter of 2018 with US$9.2 million, capturing 18.9% market share of the fee pool.