India Inc's appetite for making deals is robust:: Business Line

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India Inc's interest in M&A seems to have sustained, despite the gnawing fundamental challenges facing the economy, according to data released by advisory firm, Grant Thornton India. The total value of deals (M&A, PE and QIP) struck in May 2011 was about $5.4 billion across 99 deals as compared with $1.8 billion sealed across 72 transactions in May 2010.

Surge in inbound and private equity deals, several high value M&A deals and action in new sectors were among the other notable trends. Here are the key highlights:

INBOUNDS DOMINATE

Foreign companies seem to be in no mood to shy away from the domestic arena, what with their hunger for Indian companies only growing. Inbound deals, though only one-third in value compared with what was recorded in May-2010, showed a healthy surge in volumes. Inbound deals value for the month was about $1.3 billion ($3.8 billion) across eight deals (five last year). It, however, is an altogether different story if the year-to-date deal data are seen, what with the value of inbound deals struck so far this year far surpassing the total inbound deal value transacted in Jan-May 2010.

Year-to-date, there have been 51 inbound deals for a total value of $17.3 billion as compared to $5 billion inbound deals over 38 deals reported in same period in 2010. In fact, the surge in inbound deals has helped India Inc. match its last year's score of total cross-border deals for the first five months. The total value of cross border deals struck in the first five months in 2010 was about $22.7 billion (127 deals), while the value of such deals is pegged at about $23.1 billion (125 deals) this year.

Outbound deals on the contrary have remained relatively sedate, with May-2011 seeing 19 deals for a total value of about $2.1 billion as against 19 deals worth over $4 billion in May-2010. India Inc's deal-making appetite, however, remained robust, with companies striking domestic deals in plenty; domestic deals totalled $735 million across 28 deals during the month, roughly 2.5 times the deal values transacted in the corresponding month last year.

HIGH-VALUE DEALS AND NEW SECTORS

There have also been several high value deals this month, with four M&A transactions valued at over a quarter billion dollars (see table). The top five M&A deals made up about 79 per cent of the total M&A deal values for the month. Interestingly, the month also saw deal activity spread to a handful of new sectors such as shipping and ports and electricals.

PE ON A STRONG WICKET

Private equity action remained robust, what with the month seeing 43 deals for an aggregate value of about $1.14 billion as against $0.26 billion (15 deals) in May 2010. PE activity on a year-to-date basis too has surpassed that seen in same period in 2010. So far this year, PE deals total to about $4 billion (156 deals), a healthy growth from what was reported in Jan-May 2010 ($2.6 billion across 109 deals)