Indian mergers and acquisitions down 6.8 per cent to $23.8 billion so far this year: report

Mergers and acquisition (M&A) deals involving Indian companies in the first nine months of 2013 in terms of value were down 6.8 per cent at $23.8 billion, according to data from a Thomson Reuters report.

M&A deals at $23.8 billion for January-September this year is the lowest in the last four years. The previous lowest figure for the same period was $14.9 billion in 2009.

However, according to the report, total cross-border M&As grew 36.7 per cent to $19.3 billion, driven by a 178.5 per cent spike in outbound M&As, while inbound deals slipped 2.3 per cent to $10.8 billion from the first nine months of 2012, according to the report.

There was a drop in inbound M&As as well, with the deal size slipping to $10.8 billion, the lowest first nine months period since 2009 when it stood at $4.4 billion, the report said, adding that the outbound agreements jumped 178.5 per cent to $8.5 billion.

During the third quarter of calendar year 2013, overall M&As involving domestic companies totalled $5.4 billion, a whopping 60.1 per cent sequential decline from the second quarter of 2013 and a 29.5 per cent drop from the year ago period, it said.

Average deal size climbed to $72.8 million during the period under review, compared to $68.8 million during the first nine months of 2012.

Domestic M&As stood at $3.6 billion, down 65.4 per cent compared to the same period last year, the lowest first nine month-level since 2004 ($1.5 billion).

The bulk of domestic activity focused on the materials sector at $1.5 billion, down 29.4 per cent from the same period last year, but captured 41.2 per cent of domestic M&As.

Completed M&As involving domestic companies totaled $21.8 billion, a 58.1 per cent growth from the first nine months of last year.

Energy and power sector deals lead with 25.5 per cent market share worth $6.1 billion, a 246.7 per cent increase from the same period last year.

The second slot was cornered by industrials (18 per cent), followed by consumer staples (16.1 per cent), together capturing a market share of 34.1 per cent, registering and increase of 203.8 per cent and 221.3 per cent, respectively.

However, private equity-backed M&As slumped 48 per cent, the lowest since 2009 with a value of $1.9 billion so far this calendar year, the report said.

The high technology industry accounted for 31.7 per cent of the private equity-backed M&As at $589.2 million, more than a five-fold rise from a year ago despite 18.8 per cent drop in the number of such deals this year.

The bulk of inbound deals focused on consumer staples in terms of deal value and captured 34.6 per cent to $3.7 billion, a nine-fold increase from the first nine months of 2012.

Topping the list was Unilever's $3.573-billion HUL buyback, which saw the British parent increasing stake in Indian arm by 14.78 per cent to 51.55 per cent. This deal, in fact, accounted for 40.1 per cent of inbound M&As in terms of value.

In terms of geography, the United States saw the most number of deals with 66 transactions worth $2.9 billion. Outbound acquisitions focused on the energy and power sector stood at $5.1 billion, and captured 60.3 per cent of the foreign acquisitions. Industrials followed in second place with 31.7 per cent of the deal size, with $2.7 billion worth of transactions, the data showed.

Mozambique was the top most targeted nation in terms of value, accounting for 60.3 per cent of the market share worth $5.1 billion from two deals. The US, however, saw the most number of announced transactions with 18 deals valued at $2.7 billion, or 31.9 per cent of the share.

M&A fees rose 20.2 per cent, totalling $76.9 million during the reporting period.

Citi took the top spot on M&A fee rankings for advisory work for completed M&A deals so far this year with $14.8 million, and accounted for 19.2 per cent of the market share of the market fee.