The Hindu Business Line : India Inc signs deals worth $68.32 b in 2007

Mumbai, Dec. 20 India Inc was on a shopping spree in 2007, striking deals including merger and acquisition (M&A) and private equity investment worth $68.32 billion against $28.16 billion last year, a rise of 142.61 per cent, according Grant Thornton’s Dealtracker

It was $18.35 billion in 2005.

The average Indian M&A deal size was close to $77 million, while the average Indian PE deal size was around $44 million in 2007. Corporate India signed 661 M&A deals valued $51.17 billion in 2007 against 480 deals worth $20.30 billion in 2006.

There were 313 domestic deals (both acquirer and target being Indian) with an announced value of $2.83 billion and 348 cross-border deals of $48.34 billion. 240 of the cross-border deals were outbound deals (Indian companies acquiring businesses outside India) with a value of $32.73 billion and 108 were inbound ones of close to $15.61 billion.

Mr Harish HV–Partner, Corporate Advisory Services, Grant Thornton, said, “There is strong growth in cross-border deals, as India Inc is going with gusto across the world buying up companies. This is different from the State-led acquisitions that of China Inc where the deals are big, strategic for China and comes with a significant element of push and support from the Government.”

Private Equity

The value of private equity deals in 2007 went up by 118 per cent to $17.14 billion. It was $7.86 billion last year. There were 386 private equity deals in 2007 against 302 last year. In 2005, private equity investors pumped in $2.03 billion through 124 deals.

The number of high value deals jumped significantly in 2007. There were 48 deals of over $100 million and 77 deals of $50 million in 2007 as compared to 11 deals of over $100 million and 29 deals of $50 million in 2006.

Hot sectors

Steel and telecom sectors were the clear leaders. The two sectors cornered $14.9 billion and $11.3 billion, accounting for about 50 per cent of the total M&A deal value in 2007. Tata Steel’s acquisition of Corus for $12.2 billion and Vodafone’s majority stake in Hutchison Essar for $10.83 billion were the major deals that went through.

In 2006, sectors like IT & ITeS and pharma, healthcare and biotech had the highest value of M&A deals, unlike the M&A trend in 2007.

PE investment

The highest proportion of PE/Venture Capital investment was made in real estate and infrastructure and banking and financial services sectors with an investment of $6.44 billion and $3.09 billion. The two segments account for over 55 per cent of private equity investment made in India in 2007.

The major PE investments in these sectors were a $1,000 million investment in GMR Infrastructure by a group of private equity investors, besides ICICI Venture’s investment of $800 million in Jaypee Group and Carlyle Groups 5.60 per cent stake in HDFC for $650 million.

IT and ITES led volume charts with 66 deals. This was followed by Real Estate & Infrastructure Management and Banking & Financial Services sectors with 58 and 57 deals respectively.

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