Thought Leadership

Monthly Dealtracker - October 2019

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

Deal summary – October Volume Value (USD million)
Year 2017 2018 2019 2017 2018 2019
Domestic 19 24 18 378 2,294 226
Cross-border 13 23 6 660 518 1,018
Inbound 8 15 3 395 406 985
Outbound 5 8 3 265 112 33
Mergers and internal
restructuring
4 - 4 2,742 - 290
Total M&A 36 47 28 3,780 2,812 1,534
PE 57 59 72 1,586 2,989 3,727
Grand Total 93 106 100 5,366 5,801 5,261

 

Though the macro-economic factors continue to indicate uncertain economic conditions, October 2019 deal trends are much closer to the trends reported in the comparative month in 2017 and 2018. October 2019 deal values are about 1.85x the deal values reported in September 2019. There were 100 deals aggregating to USD 5.26 billion reported in October 2019.

M&A activity in October 2019 witnessed 45% and 40% drop in deal values and volumes respectively as compared to October 2018 primarily due to low activity in the domestic deal trends. October 2018 had reported four large domestic transactions aggregating to about USD 2.1 billion; one in the energy and natural resources sector, two in the media and entertainment sector and one in the FMCG segment. While the trend in energy and natural resources sector continued in October 2019, the domestic transaction was replaced by an inbound strategic investment in Adani Gas Limited by French major Total SA to take India’s clean energy drive forward. Deal volumes was fairly spread across pharma, automotive, banking and financial services, energy and natural resources, IT and ITeS, and media and entertainment sectors.

Upbeat PE/VC activity during the month offset the shortfall in M&A activity. PE/VC transactions reported a 22% and 25% increase in deal volumes and values respectively as compared to October 2018. Large ticket consortium investments ruled the charts. The key investments were primarily to pare debt, expand markets and capitalise on inorganic growth opportunities. Considering the current economic situation, we expect big ticket PE/VC investments to continue.

Sector focus: Manufacturing, energy and natural resources, pharma, healthcare and biotech, IT and ITeS, and banking and financial services sectors are expected to contribute to M&A transactions, while debt-heavy and capital-starved sectors such as energy and natural resources, infrastructure management, and banking and financial services will be the major seekers for PE/VC investments. Start-up occupies a special status for strategic reasons both for M&A and PE/VC transactions and will continue to be the most sought after sectors.

Outlook: PE/VC transactions will continue to contribute a large share in the overall deal activity; however, the absence of large-ticket M&A transactions will weaken the overall deal activity.