'Mumbai still hub for M&A deals but NCR, Bangalore catching up'

In an interview with CNBC-TV18, Harish HV of Grant Thornton said that IT/ITeS and healthcare sector continue to dominate the private equity activity followed by education continues to heighten predominantly in IT/ITeS and healthcare, those are the two big sectors followed by education.

In the year just gone by, corporate deals in India were struck at a steady pace. As per Grant Thornton, 1600 deals were made throughout 2015.

However, value of the deals came down as not many multi-billion dollar deals happened due to the global state of the market.

In an interview with CNBC-TV18, Harish HV of Grant Thornton said that IT/ITeS and healthcare sector continue to dominate the private equity activity followed by education continues to heighten predominantly in IT/ITeS and healthcare, those are the two big sectors followed by education.

Below is the transcript of Harish HV's interview with CNBC-TV18\\'s Ronojoy Banerjee.

Q: Tell us how should we read this data because we see in terms of the overall cumulative size of the overall deal in 2015, that has not changed much compared to 2014. However in terms of the number of transactions that have gone up by 38 percent which your report says was the best ever, how should we read this data?

A: In terms of deal picture I can see that deals are now a everyday affair in India. We had about 1600 deals though the value of the deals came down a bit but the volume has increased showing that there is a good trend of transactions and everybody is looking at it.

Clearly in some of the earlier years we saw multi-billion dollar deals but those are not very much happening given the global state of the market but M&A is here to stay and M&A is core element of strategy is very evident from where we are seeing the market for deals.

The other big thing is the heightened activity in investments in start-ups. The third trend is that after a number of years we are seeing PE exit through IPOs. So, these are some of the tends that I see.

Another very interesting trend which I saw was that in traditional deal market it was all Mumbai focused and bulk of the deals were centred around Mumbai but today if you look at the deal scenario it is distributed almost equally between NCR, Mumbai and Bangalore. So, we have no three deal centres in India - the other two centres being NCR and Bangalore picking up very fast and almost touching levels of Mumbai. So, these are some of the top headlines that one could see.

In terms of sectors, in terms of value oil and natural gas will take the cake but IT/ITeS and pharma continue to remain the top sectors for 2015.

Q: What more can you share with us since you track the private equity space so closely?

A: PE activity continues to heighten predominantly in IT/ITeS and healthcare, those are the two big sectors followed by education and then we see some activity in manufacturing and other areas but they continue to focus on this. We think that there is a lot of money going into new age start-ups if you can still call them that - the Fliokart's, Snapdeal's and Ola's of the world. So, if you can still call them start-ups that is where the focus and the money is going.

Q: In 2015, 1600 deals worth USD 47 billion while 2014 recorded 1200 deals which were about USD 49 billion. So, overall it has been flat. So, size of each investment has gone down. Is there a trend going forward from hereon because now the government has also unveiled a start-up policy. So, do you see in 2016 increased number of deals taking place and the value of the deals coming down?

A: Average transaction is obviously smaller. Earlier the top 10 transactions would take a significant portion of the value and they used to be couple of billion dollars. Last year we saw couple of billion dollars plus transactions this year, we have hardly seen any billion dollar transactions. So, it is a more secular trend. Again people are less adventurous in terms of doing multi-billion dollar deals that we saw in the yesteryears.