Thought Leadership

Monthly Dealtracker – August 2020

We are pleased to present the Monthly Dealtracker, which captures the deal activities in India during July 2020.

Deal summary – July Volume Value (USD million)
Year 2018 2019 2020 2018 2019 2020
Domestic 32 24 17 1,160 1,721 418
Cross-border 20 13 15 7,986 2,259 8,472
Inbound 6 6 6 635 2,182 6,775
Outbound 14 7 9 7,351 77 1,697
Mergers and internal
restructuring
1     5    
Total M&A 53 37 32 9,151 3,980 8,890
PE 81 73 77 2,185 5,526 3,943
Grand Total 134 110 108 11,336 9,506 12,833

The aggregate deal values for the month indicate deal activity is upbeat when compared to the same period last year or June 2020. However, sans the USD 4.8 billion funding received by Reliance Jio Platforms during the month, there is a 15% decline in deal values compared to July 2019 and 14% growth compared to June 2020. The deal volumes remained steady for the same period.

The transactions in mergers and acquisitions (M&A) led the growth story in overall deal statistics. Google’s investment of USD 4.4 billion in Reliance Jio platform and BP LLC’s USD 1 billion joint venture with Reliance Industries Ltd. to operate in India's fuels and mobility markets constituted 71% of the total M&A activity for the month. This highlights the ability of Indian businesses to attract high value inbound transactions to a strong domestic market as well as technical expertise in the telecom and technology sector. The month also witnessed USD 1.5 billion outbound acquisition by Haldia Petrochemicals to strengthen its technical expertise in the oil and gas sector.

Private Equity (PE) deal volumes witnessed marginal growth compared to July 2019 and June 2020. However, in terms of values, slowdown was evident due to absence of large ticket transactions. In July 2019, USD 3.6 billion investment by Brookfield in Reliance Jio Infratel led to a growth in PE deal values. Reliance Jio Platform attracted USD 350 million investments in July 2020 as compared to USD 4.9 billion in the month before.

Sector focus: The telecom sector combined with technology platform, the IT and ITES and the energy and natural resources sectors witnessed majority M&A transactions (values and volumes) during the month. In addition to telecom combined with technology platform and IT and ITES, PE investments also focused on e-commerce, pharma and healthcare as well as Insolvency and Bankruptcy Code (IBC) transactions. A similar trend is expected to continue going forward.

Outlook: Despite the phased unlocking, the coronavirus pandemic continued to obstruct the economic recovery. The deal activities in the last few months highlight that the sectors insulated by the pandemic, the sectors enabling solutions to the pandemic and companies with scalable platform will continue to attract transactions. Further, the fund raise by Reliance Jio also point to the expectation from the domestic economy by various investor categories post the pandemic.