Monthly Dealtracker - January 2019

The deal scene started on a low note in January 2019, both in terms of overall deal volumes and deal values, as compared to January 2018. Last month, 36 M&A deals aggregating to $2.3 billion and 57 PE/VC deals aggregating to $1.3 billion were reported, as opposed to 47 M&A deals aggregating to $15.1 billion and 84 PE/VC deals aggregating to $1 billion in January 2018.
Inactivity in domestic M&A transactions mostly impacted the M&A report card for January 2019. January 2018 had 4 transactions in the billion-dollar category aggregating to $13.9 billion. A drastic fall in the number of such large transactions resulted in domestic transactions declining from $12.63 billion in January 2018 to $0.39 billion in January 2019. Consolidation for creating leadership position, sale of non-performing business and expansion to new geographies were the underlying themes for key transactions last month.
36% growth in the value of PE/VC investments in January 2019 as compared to January 2018 is primarily because of the number of large-ticket investments, which also reflected in the average ticket size trend, which increased from $11.62 million in January 2018 to $23 million in January 2019. An increase in large ticket investments also reflects the rise in confidence of the investors and strengthening the role of PE/VC fraternity as growth capital providers.

Sector focus: Focus in the current month was primarily on pharma, healthcare and biotech, manufacturing, IT and ITeS, and banking and financial sectors for M&A transactions, as well as in start-ups, IT and ITeS, e-commerce and banking and financial sectors for PE/VC investments. Real estate, infrastructure, pharma, healthcare and biotech, and manufacturing are expected to be the sectors of interest based on the announcements in the Union Budget 2019

Outlook: Though the Union Budget has attempted to create a favourable deal environment - as mentioned in our earlier reports - deal activity is expected to be tepid for the part of the year considering the domestic political uncertainty and global economic conditions.