M&A activity in India touches three-year low of $38.1 billion in H1 2020

Merger and acquisition (M&A) activities in India witnessed a downtrend in the first half of 2020 with total deal value touching a three-year low, largely owing to liquidity crunch in the wake of coronavirus pandemic, says a report.

According to Refinitiv, formerly the Financial & Risk business of Thomson Reuters, India Inc's M&A deals fell to a three-year low of $38.1 billion in the first half of 2020, a 14.1 per cent decline compared to the first half of 2019.

Similar to deal values, number of deals also witnessed a 22.7 per cent decline on the back of 25.8 per cent fall in domestic M&A deals.

India-targeted M&A stood at $35.1 billion, down 14.5 per cent from the same period last year, the lowest first half period since 2017, the report said.

Domestic M&A activity also dropped by 25.8 per cent in value compared to last year and totaled $17.9 billion as number of announced domestic deals fell 19.9 per cent from a year ago.

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Facebook stake purchase in Reliance Industries' Jio Platforms is the largest India-involved deal so far this year. This brings India inbound M&A activity to $17.3 billion, up 1.6 per cent from the first half of last year, as per the report.

On April 22, social media giant Facebook, through its wholly-owned subsidiary Jaadhu Holdings LLC, announced an investment of $5.7 billion (Rs 43,574 crore) to acquire a 9.9 percent stake in billionaire Mukesh Ambani's telecom arm Jio Platforms. This is the largest investment for a minority stake by a technology company anywhere in the world and the largest FDI in the technology sector in India, RIL had said in a statement.

Also Read: CCI approves Facebook's 9.99% stake acquisition in Jio Platforms

As per the report, the United States was the most active foreign acquirer in India in terms of value as well as number of acquisitions, as value doubled to $8.4 billion (from 64 deals) compared to a year ago, capturing 48.9 per cent market share.

Meanwhile, outbound M&A plunged to its lowest level in more than a decade as deal activity fell 74.1 per cent from a year ago and reached $449.6 million. The United States was the top most targeted nation in terms of value as well as number of deals from Indian companies with 17 deals worth $229.7 million, or 51.1 per cent market share.

Also Read: Corporate debt crisis takes a toll on mergers and acquisitions in 2019

The first half of the year was dominated by M&A deals in the energy and power sector, followed by telecommunications and financials sector.

"Majority of the deal making activity involving India targeted the energy and power sector which totaled $8.6 billion, up 31.9 per cent from a year ago and captured 22.7 per cent market share. Telecommunications and financials rounded out the top three industries with 15.5 per cent and 14.6 per cent market share, respectively," the report said.

BofA Securities takes the top spot for any Indian involvement announced M&A league tables, with $6.7 billion in related deal value each, capturing 17.6 per cent market share.