Grant Thornton M&A Dealtracker, October 2017

Overall deal activity (M&A and PE) saw a marginal increase of 3 per cent in deal values, with deals worth USD 53 billion recorded. Yet, volumes declined by 24 per cent amidst uncertainty in the deal environment due to GST and the Insolvency & Bankruptcy Code.

Grant Thornton’s M&A Dealtracker report for October 2017 shows that YTD 2017, overall deal activity (M&A and PE) saw a marginal increase of 3 per cent in deal values, with deals worth USD 53 billion recorded. Yet, volumes declined by 24 per cent (973 deals) amidst uncertainty in the deal environment due to GST and the Insolvency & Bankruptcy Code.
 
There were three billion-dollar M&A deals (YTD 2017) and 34 deals estimated and valued at and above USD 100 million, compared to eight billion-dollar deals and 37 deals valued at and above USD 100 million in YTD 2016.
 
The absence of big ticket transactions, compared to YTD 2016, has resulted in a 10 per cent decline in deal values. Also, deal volumes are yet to match the levels witnessed in YTD 2016.
 
In October, there was a 4.6-fold decline in M&A deal values. This was primarily due to the high deal values in October 2016, such as Rosneft PJSC, Trafigura and United Capital's USD 12.9 billion acquisition of Essar Oil. 
 
Compared to September 2017, there was significant growth in deal activity in October 2017, with a 4.7-fold increase in the deal values, driven by one billion-dollar deal contributing 64 per cent of total deal values, while volumes remained muted.
 
The Banking & Financial sector led the deal activity, contributing 69 per cent of the total deal value, while the IT & ITeS sector led the deal volumes, capturing 23 per cent of deal value.
 
Commenting on the report, Prashant Mehra, Partner at Grant Thornton India LLP, said:
“October (M&A and PE) witnessed over 90 transactions valued at around US$ 5.3 billion. This was a decline from the same period last year but that was primarily due to some big-ticket transactions in Oct ’16, such as Rosneft PJSC, Trafigura and United Capital's acquisition of Essar Oil. Both domestic and cross-border M&As were subdued in October and the reason seems to be that industry is busy dealing with the implementation issues around GST.
 
From a sector perspective, BFSI seems to be the major contributor to M&A transactions, contributing US$ 2.6 billion of the US$ 3.8 billion in October. In spite of the issues faced by the manufacturing sector around GST, it continues to show traction, which should only increase going forward.
 
From a year- to-date perspective, the drop in volume of transactions has been around 20%, with values declining by 10%, but the run-up to the year seems optimistic. With India gaining 30 positions on the Ease of Doing Business index, reforms uplifting this ranking further, the effects of past reforms finally showing a positive impact on the economy and the stock market gradually ticking upwards, transactions should now start to inch upwards. While we will hopefully end 2017 on a high note, traction will perhaps be concentrated in core sectors.”
 
Source: Grant Thornton India
 

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