Millennium Post

India Inc’s April-June M&A deals rise 14% to $7 billion

Corporate India’s merger and acquisitions deal tally for April-June 2016 stood at $7 billion, up 14 per cent from the corresponding quarter a year ago, largely driven by big ticket transactions, an EY report says. According to EY s recent Transactions Quarterly report, there were 190 deals with a total disclosed deal value of $7.0 billion in the second quarter of this year, while transactions worth $6.1 billion were announced in the corresponding period last year.

However, deal volume (number of deals) declined 8 per cent as compared to the corresponding quarter last year. The 14 per cent jump in aggregate disclosed deal value was predominantly due to four mega deals ($500 million and above), which contributed around $4 billion and accounted for 57 per cent of the total disclosed deal value during April-June this year.

Sector-wise, technology segment continued to dominate the deal volume with 23 deals, followed by infrastructure and retail and consumer products sectors which clocked 18 deals each. On the value front, the infrastructure sector led with $2.8 billion. “While the relative softening in deal activity reflects the overall tepid nature of the global M&A market, the deal activity was more pronounced on the domestic front on account of some mega deals and driven by a need to consolidate,” said Amit Khandelwal, Partner and National Director, Transaction Advisory Services, EY. “Inbound activity also saw an increase owing to global investors’ continued interest in India. We expect the M&A activity to remain stable over the coming months,” Khandelwal added.

Domestic activity continued to dominate the Indian M&A transactions, with 103 deals accounting for an aggregate disclosed deal value of $4.9 billion. The largest deal involving home-grown companies during the quarter was the announced acquisition of Welspun Renewables Energy by Tata Power Renewable for $1.4 billion. In another deal, JSW Energy announced to acquire Jindal Steel and Power Limited s 1,000 mw power plant in Chhattisgarh for $977 million. “These big-ticket transactions, especially in the power sector, were distressed asset sales by leveraged corporations to deleverage 
their balance sheets. 

“These deals are anticipated to gain further prominence in coming months, with banks stringent view on non-performing assets,” the report said. Going forward, the report noted that the overall deal momentum may face a period of uncertainty in the near-term due to continued economic and political uncertainties in global markets. Nevertheless, with the long-term outlook on India remaining robust, the activity should pick-up pace once the global political and economic scenario become 
more settled. 

Global quarterly investments in fintech cos total $9 billion
Global investments in fintech companies across both venture-backed and non-venture-backed companies totaled $9.4 billion in the second quarter of this year, says a report. However, investment directed to VC-backed fintech (financial technology) startups fell 49 per cent, the report said. According to the Pulse of Fintech, the quarterly global report on fintech VC trends published jointly by KPMG International and CB Insights, despite this decline, VC investment in fintech is on pace to exceed 2015 results. 

“Despite VC-backed funding to fintech decreasing in Q2, overall fintech funding remains on track to surpass 2015 levels,” says Ian Pollari, Global Co-Leader of Fintech, KPMG International. Funding and deal activity to VC-backed fintech companies in the first six months of 2016 are on pace to hit $14.8 billion across more than 820 deals by the end of 2016 at the current run rate. Asia saw VC-backed fintech companies raise USD 0.8 billion across 46 deals in April-June 2016 a funding decline of 71 per cent from the first quarter of this year primarily due to the lack of major mega-rounds. 

Commenting on the findings, CB Insights CEO Anand Sanwal said: “The decline in fintech financing and deals is in line with what we’re seeing in the broader venture environment for startups, as VCs as well as crossover investors are pushing back harder on profitability and business model concerns. “Despite the funding drop, previously under-invested areas of fintech such as an insurance area are gaining strong momentum among venture investors across geographies.” Meanwhile, India market continues to see action. Neha Punater, Partner and Head of Fintech, KPMG in India said, “VC investment in fintech remains strong in India.” 
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