India-focused merger and acquisition deals witnessed a moderation in May due to global economic situation and concerns over government policies along with depreciation of the Indian rupee.
According to global consultancy firm Grant Thornton,total M&A and PE deals in the month of May 2012 were valued at USD 3.90 billion by way of 68 transactions,a 28.57 per cent decline from USD 5.46 billion (through 100 deals) in the corresponding month of 2011.
“Overall,we are witnessing moderation in the deal momentum driven by the global economic concerns (mainly around Europe) coupled with Indian economic concerns on Government policies and regulations along with the depreciation of the Indian rupee,” Grant Thornton India LLP Partner,Transaction Advisory Services Raja Lahiri said.
During May 2012,deal value was USD 3.9 billion (by way of 68 deals) which included M&A of USD 3.5 billion (via 41 deals) and PE of USD 0.3 billion (through 27 deals).
Inbound M&A deals — wherein foreign companies acquired businesses in India — were the flavour of the month with transactions worth USD 2.10 billion,while,the total value of outbound deals — wherein Indian companies acquired businesses outside India amounted to USD 0.95 billion.
The total value of domestic and internal restructuring deals in May 2012 was USD 0.51 billion (through 24 deals) as compared to USD 0.73 billion (by way of 28 deals) in the period under consideration last year.
“There is potential of domestic mergers with some of the promoter groups focused to reduce debt burden. Case in point is Future Group¿s divestment of Pantaloons to Aditya Birla Nuovo and Future Capital’s recent exit to Warburg Pincus,” Lahiri said.
Key M&A deals in May this year were HSBC¿RBS India deal (USD 1.8 billion,which got the RBI approvals),Piramal Healthcare’s acquisition of Decision Resources Group (USD 680 million) and Thomas Cook India exit through sale to Fairfax Holdings (USD 163 million).
PE deal values amounted to USD 0.35 billion through (27 deals) in May 2012 as compared to USD 1.14 billion (43 deals),in the year-ago period.
Key PE deals in May included APG pension Funds’ investment in Lemon Tree Hotels (USD 130 million),GIC and other PE’s investment in Samvardhana Motherson Finance (USD 44 million) and Warburg Pincus investment in Quikr.
Piramal Healthcare’s acquisition of Decision Resources Group for USD 680 million,whereby it made its entry into the global healthcare database and consulting services industry,was termed as the deal of the month by Grant Thornton.