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India Inc riding high on M & A
By agencies
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Friday, 12 August 2005, 19:30 IST
MUMBAI: Deal activity in the first half of 2005 broke out of the flat trend seen since mid-2002. INDATA recorded 277 deals valued at Rs 261.5 billion ($6 billion) between January and June 2004. The first half of 2004 was a good period for corporate finance and well ahead of the full year total for 2004 ($5.2 billion).
Average deal value was higher by 42 percent at Rs 944 million ($21.7 million) compared to Rs 663 million ($14.7 million) in 2004. Strategic investors dominated the deal flow in H1 2005. M&A deals made up 88 percent by the value of all deals and private equity deals only 12 percent, compared to 67 percent and 33 percent in the whole of 2004. However, private equity majors such as Blackstone and Carlyle have established offices in India and announced substantial investment plans.
While issues of warrants and foreign currency convertible bonds (FCCBs) remain popular, a new trend has emergedof block deals effected through the stock market. While block deals are not part of INDATA, it is difficult to ignore 12 large block deals on India's two main stock exchangesBSE and NSE, which totaled Rs 68.5 billion ($1.6 billion). In the largest of these deals, Warburg Pincus made a profitable exit by selling a 9.3 percent stake in telecom major, Bharti Televentures, for Rs 38 billion ($872.8 million) in two block deals to a consortium of investors including Capital International, Fidelity, the Government of Singapore and others.
The finance sector replaced IT as the largest contributor to INDATA in H1 2005, with a total of 36 deals totaling Rs 50.8 billion ($1.2 billion) made up 20 percent of total deal value. IT still remained the largest contributor in terms of number of deals with a total of 43 deals, but made up only 5 percent of the total deal value.
In contrast to previous years, deal activity in H1 2005 was spread across a wide range of sectors, with telecom (16 percent), foods and FMCG (13 percent), cement and building materials (10 percent), metals (9 percent), oil and gas (5 percent), automotive (5 percent) and pharma and healthcare (5 percent) displaying healthy levels of activity.