M&A values recorded a 73-month low at $393 million with domestic deals falling over 11 times compared to the level recorded in July 2016, while cross-border deals declined by 94 per cent, Grant Thornton's M&A Dealtracker report said.
"This was primarily due to absence of big ticket transactions this month," it added.
As compared to June this year, deal activity in July remained stable with 2 per cent increase in deal values, while volumes remained muted, the report said.
"July witnessed over 30 transactions valued at $400 million. This was much lower than what we witnessed in the same month last year and the key reason seems to be low level of domestic M&A transactions. What explains this decline is the fact that most M&A transactions were in a 'wait and watch' situation owing to the focus on GST implementation," said Prashant Mehra, Partner, Grant Thornton India LLP.
The advent of GST last month appears to have kept deal makers busy with transactions declining y-o-y to $1.6 billion across 93 deals, the report said.
Tepid M&A activity led to an over 67 per cent y-o-y decline in deal values, while slow traction in PE investment volumes led to deal volumes declining by over 30 per cent.
"In a couple of months, we should see M&A bounce back. Cross-border continues to be on a decline because, instead of outbound, the focus seems to have shifted to domestic activity and inbound is further delayed because of GST implementation," Mehra added.
As per the report, during July, banking sector led the deal activity by contributing over 26 per cent of total deal value.
Increasing consolidation drove deal volumes in the start-up sector capturing 25 per cent of volumes with the highest activity witnessed in the enterprise application and infrastructure space, it said.
The month also witnessed some big ticket deals worth over $50 million in sectors such as manufacturing, banking and media and entertainment.
The year to date tally of total M&A deals stands at $32.3 billion.
Overall deal activity so far this year demonstrated a robust 54 per cent increase in value, while volumes declined by 21 per cent.
"The remaining five months of 2017 should continue to see reasonable growth in M&A, but the key growth in transactions will perhaps be led by domestic M&A," Mehra added.
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