Financial Daily from THE HINDU group of publications
Wednesday, Jan 04, 2006


Group Sites

Corporate - Mergers & Acquisitions

Total value of M&A, PE deals in 2005 at $18.2 b

Our Bureau

New Delhi , Jan. 3

Mergers and acquisitions (M&A) are fast becoming a norm with India Inc. In fact, there were a total of 467 deals struck in 2005 as compared to about 360 in 2004. Of these, 343 were M&A deals and 124 private equity (PE) ones.

According to a report by consulting firm Grant Thornton, the total value of deals grew 48 per cent to $18.2 billion compared to about $12.3 billion in 2004. The average deal size (value per deal) was however close to $40 million. Meanwhile, there were more than 25 deals with deal value of over $100 million.

Telecom tops

The telecom sector was the clear leader in value, with large deals such as Essar Group's acquisition of BPL Communications, Vodafone's investment in Bharti Tele-Ventures, Maxis group's acquisition of Aircel, VSNL's acquisition of Teleglobe International Holdings (Bermuda), increase in stake by Essar group in Hutchinson Essar Telecom, among others.

The telecom sector commanded a one third share of all M&A deal value. The other sectors that significantly contributed to M&A value were energy, IT&ITES, steel and chemicals/plastics.

A noteworthy trend in the M&A transactions in 2005 was the high proportion of cross border deals to the total M&A activity, at 58 per cent of the deal value amounting to $9.5 billion and 56 per cent of the deal volume at 192 deals. There were more outbound deals (Indian businesses acquiring international companies) than inbound deals both in value and volume terms.

Global footprint

According to the report, while Indian companies have acquired several businesses overseas to get an international footprint, most of these outbound deals have been lower value deals showing that Indian businesses are treading carefully and minimising their risks through value buys.

The largest proportion of outbound acquisitions has been in Europe (50 per cent of deal value), followed by North America (24 per cent of deal value). USA and UK are the two countries that garnered the maximum outbound deal share, at 35 per cent of deal value.

Inbound deals were fewer in number and much higher in value.

PE deals grow

Private equity investments too saw substantial growth in 2005. From $1.1 billion invested in 60 deals in 2004, private equity investments have increased to $2 billion in 124 deals. The value of PE deals increased by 85 per cent in 2005, with more than 10 deals of over $50 million.

Sector-wise, pharma, healthcare and biotech emerged as the largest with 18.4 per cent share of all PE investment, having received $374 million in 19 deals. The other significant sectors were IT & ITES with 12 per cent of deal value, automotive with 9.6 per cent and banking and financial services with 9.1 per cent.

IT & ITES had the maximum number of private equity deals with 22 deals in 2005, followed by pharma, healthcare & biotech, banking & financial services, textiles & apparel and media & entertainment.

According to the report, significant developments in the private equity sector have included increased focus by many funds on larger and mature deals including PIPE deals across sectors; more fund allocations to India; international funds setting up establishments in India; and several funds looking for "change of ownership/ buyout" deals (in line with the global PE trend).

More Stories on : Mergers & Acquisitions

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
ITC to invest $1 b in e-Choupal infrastructure

Toyota sells 32,000 units of Innova in 2005
Aurobindo HIV drug gets USFDA nod
Shell LNG terminal loses only customer
Mazda bags Rs 4.3-cr order from Siemens
Igarashi Motors to make pref offer at Rs 214 a share
7.5:100 swap ratio proposed for REVL merger with REL
Total value of M&A, PE deals in 2005 at $18.2 b
Kerala Minerals to produce titanium sponge for ISRO
Royal Orchid plans IPO to fund expansion
Africa promises bed of roses for floriculture sector
D S Kulkarni to develop building projects in US
Eveready Ind forays into mosquito repellent market
Henkel Spic eyes Rs 430-cr turnover
Tatas working on new LCV; production likely from Jan 2007
ONGC facing problems in Sunderbans — Unable to find sites for 3 wells
BCCL achieves breakeven, set to post Rs 70-cr net this year
Eastern Coalfields posts operating profit
Eveready posts 35 pc growth in tea business
Hyundai sales up 17.26 pc in 2005
Kerala Minerals achieves record production, turnover

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line