Mergers and Acquisitions Deals to Perk Up Post Elections: Grant Thornton - The New Indian Express

Mergers and Acquisitions Deals to Perk Up Post Elections: Grant Thornton

Published: 21st February 2014 06:00 AM

Last Updated: 21st February 2014 08:37 AM

Mergers and Acquisitions (M&A) in India Inc are slowing down in the new year as elections loom large.

Data collated by accountancy firm Grant Thornton shows that M&A deals fell to 33 in January 2014 compared to 41 deals in the corresponding month of 2013 and 56 in the same period of 2012.

Raja Lahiri, partner, transaction advisory services, Grant Thornton said, “January 2014 witnessed just 33 M&A deals which were much lower than those in the corresponding months of 2013 and 2012.

However, in value terms, it was up by 35% year-on-year, which was largely due to 2 large deals.  The slowdown in deal activity is likely to continue till the general elections, post which the momentum will pick up again”.

Commenting on the slowdown Jayesh Desai, head of structured investments at Piramal Enterprises Ltd said, “ The reality is that foreign investors are waiting on the sidelines for clarity on policy while Indian investors are heavily indebted by and large to look at growth from the M&A perspective”.

The silver lining in January 2014 is that the value of M&A rose to $930 million compared to $874 million in the same period last year.

The total M&A, and private equity deals in the month of January 2014 were valued at $1.6 billion (86 deals) as compared to $1.19 billion (74 deals) and $2.26 billion (93 deals) in the corresponding month of 2013 and 2012 respectively.

Among the top deals in January feature Groupe Lactalis SA buy-out of Tirumala Milk Products Pvt Ltd from its founders and private equity major Carlyle Group, which exit the venture.

Aditya Birla Group also sold its BPO firm Aditya Birla Minacs Worldwide to Capital Square Partners and CX Partners, marking the group’s exit from the IT services business, said Grant Thornton.

Among the other deals feature a transaction by Publicis Group that acquired a majority stake in Law & Kenneth, its eighth acquisition in the country since 2012.

Diageo Plc also hiked its stake in United Spirits by acquiring additional 2.4% stake from a foreign portfolio investor for $138 million and its new holding now stands at 28.7%, the research pointed out.

Despite the slowdown, Lahiri expects that IT and pharmaceutical sectors may continue to witness deal action.

“Implementation of FDI reforms in sectors such as retail, broadcasting and telecom with clarity on tax policies could bring some action back into M&A deals,” he added.

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