Thought Leadership

Grant Thornton Dealtracker – February 2020

We are pleased to present the Monthly Dealtracker that captures the recent deal activities in India.

Deal summary – February Volume Value (USD million)
Year 2018 2019 2020 2018 2019 2020
Domestic 26 22 21 186 379 1,954
Cross-border 11 21 15 926 860 2,485
Inbound 10 9 7 918 544 2,139
Outbound 1 12 8 8 316 346
Mergers and internal
restructuring
2 2 2 705 10 10
Total M&A 39 45 38 1,817 1,249 4,449
PE 63 56 74 1,741 1,148 1,414
Grand Total 102 101 112 3,558 2,397 5,863

Despite all the global and domestic upheaval, growth trend in deals, which started last month, continued in February 2020. The month witnessed 112 deals aggregating to USD 5.8 billion, which is an 11% increase in deal volumes and 2.4x the deal values as compared to February 2019.

While both mergers and acquisitions (M&A) and private equity/venture capital (PE/VC) transactions raised deal values, M&A transactions drove growth. Replacing the unsuccessful Tata Group consortium’s over a billion dollar bid for a stake in GMR Airport in April last year, Groupe Aeroports de Paris SA (ADP)’s final deal made its impact on the M&A transactions in February. The month also saw five additional large-ticket transactions, with ticket sizes between USD 250 million and USD 800 million, primarily focused on paring debt for the sellers and strengthening the market position for acquirers.

The deal activity in PE/VC transactions for the month translated into 32% and 23% growth in volumes and values, respectively, as compared to the previous year. Though the monthly trend reflected growth when compared to the same time previous year, deal values shrunk by around 33%, primarily due to the absence of transactions with ticket value exceeding USD 500 million. The larger transaction sizes reflect the increasing trend from PEs towards acquiring significant minority stakes or controlling stakes in investee companies.

Sector focus: Two large transactions in energy and natural resources sector, and one large transaction in the infrastructure management sector together underwrote 62% of the overall M&A deal values. Around 48% of the M&A deal volumes for the month are attributable to transactions in the IT and ITeS and start-up sectors. These, along with the transactions in manufacturing sector, will continue to draw M&A transactions in the coming months. The PE/VC transactions in start-up, energy and natural resources and e-commerce sectors contributed 52% and 58% of the deal values in February 2020 and January 2020, respectively. This trend is expected to draw PE/VC attention in future. Despite turmoil, the banking and financial services sector is expected to witness heightened deal activity.

Outlook: Based on the current trend, one would assume an exciting deal landscape for months to come. However, a cautious approach in the near-term would be advisable considering the meltdown in the global markets.

Pankaj Chopda
Director, Grant Thornton India LLP