Nearly three-fold increase in M&A deals y-o-y in Jan

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If January 2017 is in anyway a precursor to the road ahead for deal makers, mergers and acquisitions (M&A) seem to be on a roll. In the first month of 2017, the M&A market witnessed a nearly three-fold increase year-on-year in deal values to $2,364 million, as per data available with assurance, tax and advisory firm Grant Thornton. Last January, M&As worth $827 million were sealed.

The jump in deal values comes in the backdrop of some big-ticket consolidation in the domestic deal activity. Of the total M&A deal size, as much as $1,611 million was contributed by domestic transactions.

“With the visibility on GST and demonetisation effect behind us… domestic consumption and growth should see further acceleration,” said Prashant Mehra, partner at Grant Thornton India. “This will increase traction in domestic M&As as well as inbound investments.”  

Besides, with specific boost to FDI in this year’s budget, with the proposal to remove FIPB, 2017 should be an exciting year for deal making, said experts. FIPB is the nodal agency that approves FDI proposals.

2016 also witnessed significant action in the M&A market that saw a whopping 75 percent jump compared to 2015. However, what continues to bother deal-makers is the sluggish private equity sentiments across sectors as investors develop cold feet towards doling out fresh capital. The sector will only will look up if there are enough big-ticket private equity transactions in 2017. Venture capital activity – wherein investors put in money in startups – is expected to go slow this year as emerging businesses face the heat of scaling up after raising capital in hordes in the last two years.

In January 2017, as many as 79 private equity/venture capital deals worth $652 million were sealed as against $1,120 million that was spent over 97 deals in 2015. This is for the first time in three years that the value of private equity/venture capital deals has come down below the $1 billion mark.