M&A deals for 2012 cross $16-billion mark in India

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The total value of merger and acquisition (M&A) deals in the country so far for 2012 has crossed USD 16 billion mark largely on account of a major intra-group deal in Anil Agarwal-led Vedanta group last month.

Deals worth USD 14.75 billion were recorded last month alone -- the largest for the month of February in three years.

The companies announced a total of 50 M&A deals during February 2012, as against 57 deals worth USD 1.31 billion in the previous month, global consultancy firm Grant Thornton said in a report.

On a year-on-year basis also, the number and value of M&A deals increased from 45 deals worth USD 7.75 billion in February 2011, it added.

"We have seen a significant jump in overall transaction values in the month due to the announcement of a large restructuring deal by Vedanta group which is the highest in the past three years," Harish H.V., partner of India Leadership Team at Grant Thornton said.

The deal of the month was the large restructuring deal by Vedanta group under which Sterlite Industries, Sesa Goa and Vedanta Resources announced merger of Sesa Goa and Sterlite and the proposed consolidation of the group structure. These deals are together estimated to be worth over USD 12 billion.

The domestic and internal restructuring deals accounted for a major chunk of total deal size last month, which recorded 36 such deals worth USD 14.05 billion, up from 19 deals worth USD 0.55 billion in the year-ago period.

In the first two months of this year M&A deals worth USD 16.06 billion has been announced, hinting that the year 2012 likely to witness a host of M&A deals.

"The recent changes in the Competition Commission guidelines and the activity in the first two month augurs well for our forecast of this being a year of M&A for India Inc," Harish H.V. added.

The total value of inbound deals -- wherein foreign companies or their subsidiaries acquired Indian businesses -- in February was USD 270 million by way of 9 deals as compared to USD 7.45 billion in the corresponding period a year ago via 8 transactions.

There has also been an increased interest from companies in outbound in the recent two months, the report noted.

The total value of outbound deals (Indian companies acquiring companies outside India ) in February this year was USD 441 million (5 deals) as against USD 206 million (11 deals) a year ago.

In the private equity sphere, as many as 44 transactions were announced valued at USD 0.67 billion ''pointing to a larger growth in VC deals which augur well for creating more entrepreneurs and business,'' Harish H.V. said.