The value of announced mergers & acquisitions (M&A) deals involving Indian companies reached USD 77.0 billion in the first half of 2018, a 128.7 percent increase in value, surpassing the annual record set in 2007 (USD 67.4 billion). Number of announced deals grew 10.2 percent from a year ago and witnessed the busiest first half period since records began in 1980.
The average M&A deal size for transactions with disclosed values increased to USD 154.1 million during the first half of 2018 compared to USD 87.9 million over the same period last year. India-involvement M&A activity this year witnessed four mega deals above USD 5 billion (with a combined value of USD 32.9 billion) compared to only one during the same period last year (when the USD 11.6 billion Idea-Vodafone merger was announced).
Domestic M&A hit record levels with USD 40.2 billion, more than a four-fold increase in value from over a year ago, and surpassed annual all-time high in 2017 (USD 25.9 billion). Number of announced domestic deals increased 9.9 percent from the first half of 2017. Total cross-border M&A reached USD 36.0 billion, up 57.7 percent from the first half of last year. Inbound M&A activity increased 59.1 percent from a year ago, while Outbound M&A activity grew 40.5 percent from the comparative period last year.
Completed M&A deals involving Indian companies totaled USD 36.3 billion, up 1.1 percent in deal value compared to the first half of 2017 (USD 35.9 billion), as number of completed deals grew 6.4 percent.
Retail Captured 23 percent Market Share
The Retail sector accounted for majority of the acquisitions involving Indian companies with 23.3 percent market share worth USD 17.9 billion, a ten-fold increase in deal value compared to the first half of 2017, making it the highest-ever period for the sector in terms of value.
In May, Walmart Inc based in the United States agreed to acquire a 77 percent interest in Flipkart Group, a provider of online ecommerce retail services, from Softbank Vision Fund LP, a unit of SoftBank Group Corp, and Naspers Ltd, for an estimated USD 16.0 billion (INR 1.074 trillion). The deal is currently the largest-ever M&A transaction involving India, and the biggest Asia Pacific Retail M&A deal on record.
Financials and Energy & Power rounded out the top three industries and captured 16.2 percent and 16.0 percent market share, respectively
Private Equity-backed M&A in India Up 115 percent in 1H 2018
Buyside Financial Sponsor M&A activity targeting Indian companies totaled USD 6.0 billion during the first half of 2018, a 114.8 percent increase in deal value compared to the first half of 2017, and the highest-ever semiannual period. Private equity-backed M&A in India’s Healthcare sector accounted for 25.8 percent of the market share worth USD 1.5 billion, up 319.9 percent in value from a year ago. Financials and Retail followed behind with 22.2 percent and 16.8 percent market share, respectively.
India Inbound M&A Beats Annual Record in 2017
Foreign firms acquiring Indian companies reached USD 33.6 billion in the first half of 2018, a 59.1 percent increase in deal value from the first half of 2017, surpassing annual record volume in 2017 (USD 31.5 billion). Number of inbound deals grew 24.3 percent from the same period last year.
US-based Walmart Inc’s pending acquisition of Flipkart Group, a provider of online ecommerce retail services, from Softbank and Naspers Ltd, for an estimated USD 16.0 billion. The deal pushed the Retail sector up to capture 51.5 percent of India’s inbound M&A activity for a total of USD 17.3 billion, a significant increase compared to first half of last year (USD 1.7 billion). Energy & Power and Telecommunications sector followed behind with 11.6 percent and 7.9 percent market share, respectively.
The United States is currently the top acquirer of Indian companies in terms of value and number of announced deals. United States acquisitions in India totaled USD 18.8 billion, up 487.3 percent from a year ago, and accounted for 56.1 percent of India’s inbound M&A activity. Canada and France rounded out the top three with 10.5 percent and 9.3 percent market share, respectively.
India Outbound M&A Up 40.5 percent in 1H 2018 – Highest since 2016
Indian acquisitions overseas stood at USD 2.4 billion in the first half of 2018, a 40.5 percent increase in value from the same period last year, as number of outbound deals grew 10.7 percent compared to the first half of 2017. This is the highest first half period for India outbound M&A since 2016 (USD 4.3 billion).
India’s outbound acquisitions focused on the Energy & Power sector as deal value reached USD 937.7 million, and captured 39.9 percent of India’s foreign acquisitions. Materials took second place and accounted for 22.6 percent market share as deals totaled USD 531.7 million.
United Arab Emirates was the top most targeted nation in terms of value with 4 deals worth USD 937.8 million, or 39.9 percent market share. United Kingdom took second place with 20.0 percent market share. United States, which saw the most number of acquisitions from Indian companies, accounted for 14.8 percent of India’s outbound activity worth USD 347.9 million from 24 announced transactions.
Completed M&A Advisory Fees in India Down 3.3 percent
M&A advisory fees from completed transactions in India totaled USD 124.4 million in the first half of 2018, a 3.3 percent increase from the comparable period last year. Deloitte currently takes the lead in the imputed fee rankings on M&A advisory work related to completed M&A deals in India for the first half of 2018 with USD 22.2 million, capturing 17.9 percent market share of the fee pool.