Indian firms 2007 deals soar 150 percent to $70 Bn

By siliconindia   |   Wednesday, 16 January 2008, 00:50 IST
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New Delhi: India companies announced deals worth $70 billion in 2007, which is an increase of 150 percent over the previous calendar year, reported the Economic times. Merger and acquisition (M&A) and private equity (PE) deals in India, which totalled $42 billion more than 2006 accounts for about 5 percent of the increase in the value of global M&A deals which rose $870 billion last year. The value of total deals announced in India during the year 2007 stood at $70.14 billion were it was only $28.16 billion in 2006. The size of deals involving Indian companies also crossed the 1,000 mark last year. Out of the total $70.14 billion, $51.11 billion was the value of strategic M&A involving Indian companies as sellers or buyers, and the remaining $19.03 billion was the result of PE deals. The figures, revealed may not reflect the actual value of deals completed last year, as some of the transactions will take more time due to regulatory approvals. According to a latest deal tracker compiled by an advisory firm called Grant Thornton the aggregate figure also does not factor in the value of deals whose transaction value remain undisclosed such deals represents about one third of the total 1,081 deals announced in 2007. Some major M&A deals during the year 2007 was Tata-Corus, Vodafone-Hutch and Hindalco-Novelis - which constitutes more than half of the total M&As involving Indian companies during the year. The acquisitions made by Indian firms were clearly overshadowed by PE funds. Growth in both volume and value of deals struck by strategic acquirers was higher than that of the PE funds. Cross border deals including both Indian companies making acquisitions abroad and multinationals acquiring equity stakes in Indian companies, accounted for 94 percent of M&As by deal value last year as against just about 55 percent of the total in 2005. During the year 2006 the volume of domestic deals has increased by 50 percent to 321 but the average size of domestic deals shrunk to a mere $ 8.8 milliion compared to the 2005 value and in terms of transaction value domestic M&A has declined. The value of private equity deals shot up from $7.85 billion to $19.03 billion spread over 405 deals. In terms of sectoral spread there was a significant difference between M&As and PE deals. Metals and telecom were the top two sectors that attract M&As by value, meanwhile real estate was the most attractive sector for PE funds. The real estate sector accounts for more than one third of all PE deals by value. In terms of deal volume IT & ITES continued to be the most active industry leading the charts for both M&As and the number of PE deals.

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