Corporate India's merger and acquisition (M&A) deal tally declined 18 per cent to USD 30.43 billion last year even as the number of transactions saw an uptick to a three year high.
According to assurance, tax and advisory firm Grant Thornton, M&A activity witnessed transactions of USD 30 billion across around 600 deals - the highest volumes in the last three years driven primarily by the domestic segment.
"Overall M&A deal volumes remained stagnant and values declined by 18% to close the year at around USD 30 billion. However, domestic and cross-border deals showed promising trends," said Grant Thornton's 11th Annual Dealtracker.
In 2014, there were 569 M&A transactions worth USD 37.05 billion.
Domestic transactions in 2015, with over 300 deals, saw the highest number of transactions since 2007.
The report noted that though cross-border deals increased 16 per cent year-on-year on back of 11 deals valued over USD 500 million each, poor corporate performances in 2014-15 and emerging global uncertainties have kept outbound transactions within restrained during 2015.
"M&A is now a core element of corporate strategy and is here to stay. I hope we will see regulatory changes and market changes which create an atmosphere for hostile transactions. That will be a big driver of corporate growth, value and will significantly improve Governance in India," Harish HV, Partner - India Leadership team, Grant Thornton India said.
Prashant Mehra, Partner, Grant Thornton India said: "The total deal activity in 2015 seems to be slightly below 2014 but there is good continuing momentum."
The average deal size in domestic M&A has come down from around USD 64 million to USD 28 million, the average deal size for inbound investments has moved up from USD 66 million to USD 103 million.
"This throws a few indicators such as firstly, since the 'Make in India' initiative is working and the overall macro- economic indicators are looking good, India has started attracting foreign investment in the key sectors which is further corroborated by the fact that India has been the largest receiver of FDI in H1 of 2015 with USD 31 billion," Mehra said.
With inflation in control and GDP growth being revised to now end higher than anticipated, all the necessary ingredients seem to be in place for growth in deal activity as well, he said.
"The recent FDI norms and the much awaited GST will perhaps be a game changer and will further accelerate the deal activity from an inbound investment, domestic M&A and PE perspective," he added.