M&A deal value dips 9.3 percent in first quarter

Even as domestic deal value posted a stellar performance making it the best first quarter since 2006, it failed to spur the total value of mergers and acquisitions (M&A) involving Indian companies.

Total deal value fell 9.3% to $20.5 billion in the first quarter of 2018, compared with the same period last year. The number of announced deals also dropped 8.3%, according to Thomson Reuters data.

For deals with disclosed values of the transactions, the total value fell to $84.3 million during the quarter as compared with $104.1 million, last year.

In 2017, the numbers were buoyed by the $11.6 billion Idea-Vodafone merger.

Thomson Reuters’ data suggests that despite fewer deals, domestic M&A deal grew one and a half times over last year - increasing the total tally to $16 billion. Whereas cross-border M&A fared poorly and fell 76% to $3.9 billion.

The energy & power sector made for 34.4% or $7 billion of the total deal value, a seven-fold increase, compared to the first quarter of 2017. This was helped by Oil & Natural Gas Corporation's (ONGC) acquisition of a 51.1% interest in petroleum refinery operator Hindustan Petroleum Corporation (HPCL) for $5.8 billion, as per Thomson Reuters. The deal, which helped the government meet its divestment target, was the biggest M&A transaction involving India this year and the largest-ever Asia Pacific petrochemical M&A deal on record.

Thomson Reuters also notes that the first quarter of 2018 saw a rise of 15% in private equity-backed M&A. The deal value of foreign firms buying Indian companies fell 82% to $2.6 billion, while Indian acquisitions overseas declined 14.3% to $1.3 billion during the quarter.

“Singapore is currently the top acquirer of Indian companies in terms of value with $574.2 million from 9 announced deals, and accounted for 21.7% of India’s inbound M&A activity,” Thomson Reuters says. The US stood second in terms of most number of inbound acquisitions in India with 31 announced deals worth $560.2 million.

The deal value of India’s outbound acquisitions focused on energy & power reached $600.0 million, and captured 47% of foreign acquisitions. United Arab Emirates was the top most targeted country in terms of value with 3 deals worth $936.6 million, or 73.2% market share, Thomson Reuters’ data says.