M&As plunge 34.4% to $67 billion in 2019

Mumbai: The deepening slowdown has had its impact on the deal market in 2019 with mergers and acquisitions (M&As) plummeting over 34 per cent to $67.1 billion but still making it the second best, on the back of the $6-billion ArcelorMittal takeover of Essar Steel, according to a report.

As per the report by Mergermarket, M&As in 2019 was the second highest in value despite declining 34.4 per cent in 2018, which was the best-ever. But, the report is positive about 2020 as the government has eased foreign investment restrictions and plans to divest state-owned companies.

The report attributes the optimism to the relaxation in the foreign direct investment policy in August, loosening the restriction on coal and lignite mining, contract manufacturing, single-brand retail, and digital media, which may bring more opportunities to foreign investors.

"Overall M&As touched $67.1 billion across 422 deals, down 34.4 per cent in value and 3.4 per cent in volume compared to 2018 when the street saw 437 deals worth $102.2 billion," Mergermarket said in a note on Monday.

At $67.1 billion, India accounted for 10.4 per cent of the deals in the Asia-Pacific region, said the report.

Of the total, inbound activities remained strong with $37.9 billion across 221 deals, while outbound deal value plunged 84.8 per cent to a low of $2 billion across 54 deals, the lowest since 2014, when it was printed at $1.7 billion.

The numbers would have much worse had it not been for the Essar Steel-ArcelorMittal-Nippon Steel deal worth $6 billion at the end of 2019.

The second biggest was the $3.65-billion deal involving a consortium led by Brookfield Infrastructure Partners taking over Tower Infrastructure Trust in July followed by the Bandhan Bank-Gruh Finance deal of $3 billion in January.

The fourth-biggest deal was Bhushan Power & Steel Ltd takeover by JSW Steel for $2.74 billion in September, and the fifth was Reliance Industries' $2.45-billion deal with Pipeline Infrastructure Trust in March.

Private equity players continued to lead the deal street with buyouts reached record levels for two years in a row at $19.6 billion across 123 deals, surpassing the $17.6 billion involving 123 deals in the previous year.

Private equity exits, on the other hand, returned to a much more modest level at $7.9 million across 48 deals in 2019, following the all-time high in 2018 at $35.9 billion involving 59 deals.

With $8.3 billion deals across 79 activities, the US remained the dominant foreign investor both in terms of deal value as well as deal count, followed by Canada at $7.9 billion across 12 transactions, on the back of two infra-related deals: Brookfield's $3.7 billion investment in Tower Infrastructure Trust and India Infrastructure Trust's $2.4 billion investment in Pipeline Infrastructure.

Meanwhile, deals from Japan jumped a whopping 189 per cent to $3.5 billion across 23 deals in 2019 from $1.2 billion across 16 deals in 2018 and the Japanese investors are bullish on the country's logistic industry given the e-commerce boom.