Despite bullish stock markets, the overall mergers and acquisitions in deal value in the first half of calendar 2024 have slowed down by 9 per cent to $38 billion compared to $41.74 billion in the same period of 2023.
As per Bloomberg data, this is the lowest since 2017 when the deal value had touched $37.48 billion (see Chart). The acquisition of ATC Tower, a telecom tower company, by Data Infrastructure Trust for $2.5 billion is the largest transaction so far this year. The deal volume (number of transactions) was, however, up by 17.3 per cent in the first half to 1,460 transactions versus 1,245 transactions announced in the same period last year.
M&A advisors say deal flows are driven by commercial imperatives such as scale, market share, distribution network, synergy, and customer access. Of course, there could be different combinations of such imperatives in different sectors and scenarios. “The recent action on the cement front or in several parts of the financial services sector are examples of such imperatives; given the changing economic landscape, the deal flow is likely to accelerate,” Ketan Dalal, founder and managing director, Katalyst Advisors, a tax and M&A advisory firm, said.
“If one were to look at certain sectors, logistics, agro chemicals, NBFCs, and several others seem to be ripe for more action. Also, depending on the unfolding government policies, deal flows could accelerate in the infrastructure, renewable energy, healthcare, defence, and EV (electric vehicle) space,” Dalal said. The recent acquisitions in the cement industry by both Adani-owned Ambuja Cement and Birla-owned Ultratech of India Cements show that M&As are picking up in the sector due to consolidation, say bankers.
Bankers said the next wave of transactions would be led by private equity players who are sitting on significant “dry powder” (funds not deployed) for investments. American private equity majors including Blackstone, KKR, and Bain & Co have announced plans to deploy funds for investments in India and are in talks with several companies for investments. “We plan to deploy 20 per cent of our $5 billion for investments in India,” Sarit Chopra, partner & head of special situations (Asia), Bain Capital, said in an interview on Friday.
The private equity players are looking at healthcare, financial services, consumer retail, and infrastructure for investments. Officials of Blackstone Inc, the largest investor in Indian companies so far, have said they want to invest an additional $25 billion in Indian private equity assets over the next five years. Similarly, Goldman Sachs Group Inc. plans to invest as much as $4 billion over the same period. Temasek, the Singapore-based fund, plans to invest $10 billion in the next five years. Last year, it invested $2 billion to raise its stake in Manipal Hospitals to 60 per cent. KKR & Co is planning to invest a significant portion of its new $6.4 billion Asia-focused fund in the Indian infrastructure sector, including roads, highways, and renewables, it said in February this year.
MA Deals India
Source Bloomberg
Compiled by BS Research Bureau
First Published: Jul 01 2024 | 5:16 PM IST