Mergers and acquisitions (M&A) and private equity (PE) activity in India in 2014 hit a three year high, according to Grant Thornton UK’s India Watch.
M&A contributing close to USD38 billion from 573 deals, and PE contributing USD12bn from 604 deals, activity up 23% in deal value and 34% in deal volume compared with 2013.
A clear mandate from India's new government provided further momentum which sustained through the year leading to 1,177 deals, the highest ever in a decade, worth over USD50 billion.
Domestic deals largely rode on the consolidation bandwagon with Sun Pharma acquiring Ranbaxy, Kotak merging with ING Vysya, Flipkart looping in Myntra and a few large power sector mergers and acquisitions. 2014 also witnessed one of the lowest levels of outbound M&A by deal values at just USD6 billion, although volumes remained robust at 117 deals.
Overseas investors continue to tap the potential in Indian markets resulting in 35% increase in inbound values compared to 2013 and 19% increase in volume of deals.
IT&ITES sector was the largest contributor to M&A by deal value in 2014 followed by Pharma & Healthcare sector and Telecom. Based on volume of deals, IT & ITES continues to top the charts followed by Manufacturing and Pharma.
For PE, IT & ITES sector took the lead largely driven by the e-commerce sector, raising about US$4 billion from over 100 deals, contributing over 30% of overall deal value. Other key sectors were real estate and infrastructure with over USD2.4 billion, and BFSI contributing over USD1.4 billion.
Commenting on the increase in Private Equity and M&A activity, Anuj Chande, Partner, Corporate Finance and Head of South Asia Group Grant Thornton UK LLP, says: “2014 was an important year in many aspects for India Inc. After a rather cautious start to the year, we witnessed an unleashing of deals from the second quarter. We saw the year ending on a high note, with USD50 billion worth of deals, the highest since 2011.
"We expect 2015 to benefit from a combination of stable government, significant reforms, falling commodity prices and minority foreign investors increasing control of their investments, all of which should continue to drive deal activity across all sectors."
