September 26, 2019
The 2015-19 period saw over 3,600 M&A deals with an aggregate value of over US$310 billion
M&As in 2018 was driven by distressed asset deals enabled by corporate insolvency resolution
Industrial goods, energy, telecom and media represented over 60% of deals by volume and value
Amidst concerns about its economy slowing down, India has remained a significant driver of M&A due to rapid development across various sectors
Mergers and Acquisitions (M&A) activities in India reported a sharp increase during the period of 2015 to 2019, seeing over 3,600 deals with an aggregate value of more than US$310 billion, according to a report by the Confederation of Indian Industry (CII) and consultancy firm Bain & Co, published on September 25. The report stated a growth of 70 per cent in M&A activities in India, specifically in 2018.
The ‘India M&A Report 2019’ report focused on 60 ‘large deals’ made by strategic investors in India over the five-year period. These transactions, each valued at over US$250 million, contributed to M&A activity growth in 2018. Majority of the deals, featuring distressed assets, were enabled by the corporate insolvency resolution process, under the Insolvency and Bankruptcy Code (IBC). On average, the size of deals grew from US$700 million in 2015 to over US$2.6 billion in 2017 and 2018.
The report stated the role of IBC mechanisms in price discover and distressed asset recovery. In 2018, 70 per cent of growth in deal value was a direct result of distressed assets, as consolidation in various sectors increased the gap between industry leaders and other players in their respective markets. Similarly, M&A activities for non-distressed assets grew to 20 per cent of large deal volume in 2018 from the 9 per cent achieved in 2015.
Amidst concerns of an economic slowdown in the first quarter of 2019, India continues to be a significant driver of M&A, owing to rapid development across various sectors. These M&A activities have also led to a robust increase in deal volume and value, with over 60 per cent of deals relating to the industrial goods, energy, telecom, and media sectors. The energy sector and technology sector were responsible for the largest deals taking place, drawing foreign investor interest based on their potential for growth.