India M&A Reached All-time High and Surpassed 2007 Annual Record

The value of announced mergers & acquisitions (M&A) deals involving Indian companies reached US$129.4 billion in 2018, a 104.5% increase in value from last year, surpassing the annual record set in 2007 (US$67.4 billion). Number of announced deals also grew 17.2% from a year ago and witnessed the busiest annual period since records began in 1980.

The average M&A deal size for transactions with disclosed values increased to US$127.8 million in 2018 compared to US$82.8 million over the same period last year. India-involvement M&A activity this year witnessed five mega deals above US$5 billion (with a combined value of US$39.8 billion) compared to only one during the same period last year (when the US$11.6 billion Idea-Vodafone merger was announced).

Domestic M&A hit record levels with US$57.3 billion, more than double the value from over a year ago, and surpassed annual all-time high in 2017 (US$26.7 billion). Number of announced domestic deals saw the busiest year, up 17.1% from last year. Total cross-border M&A reached US$69.2 billion, up 102.9% from last year. Inbound M&A activity increased 77.0% from a year ago, while Outbound M&A activity grew five-times in value from last year.

Completed M&A deals involving Indian companies saw the best-ever annual period and totaled US$85.1 billion, up 40.3% in deal value compared to 2017 (US$60.7 billion).

Materials Captured 22% Market Share

The Materials sector accounted for majority of the acquisitions involving Indian companies with 21.9% market share worth US$28.3 billion, more than a twelve-times increase in deal value compared to 2017, making it the highest-ever period for the sector in terms of value. Three deals above US$3-billion targeting Materials sector involving India were announced this year.

Financials placed second with 15.3% market share as deal value reached US$19.8 billion, up 74.9% in value from a year ago. Indian state-owned Life Insurance Corp of India (LIC) planned to raise its interest to 53.308%, from 8.967%, by acquiring 44.34% stake in state-owned IDBI Bank Ltd (IDBI) for a total of US$2.8 billion. Concurrently, LIC planned to launch a tender offer to raise its interest to 80.484%, from 53.308%, by acquiring 27.176% stake in IDBI.

Retail sector took third spot with US$19.4 billion worth of transactions, a triple-digit percentage increase in value from a year ago. In May, Walmart Inc based in the United States acquired a 77% interest in Flipkart Group, a provider of online ecommerce retail services, from Softbank Vision Fund LP, a unit of SoftBank Group Corp, and Naspers Ltd, for US$16.0 billion (INR 1.074 trillion). The deal is currently the largest-ever M&A transaction involving India, and the biggest Asia Pacific Retail M&A deal on record.

Private Equity-backed M&A in India Up 72% in 2018

Buyside Financial Sponsor M&A activity targeting Indian companies totaled US$13.1 billion in 2018, a 72.5% increase in deal value compared to 2017 and saw the highest-ever annual period. Private equity-backed M&A in India’s Retail sector accounted for 16.2% of the market share worth US$2.1 billion, up 357.2% in value from a year ago. Healthcare followed closely behind with 13.5% market share worth US$1.8 billion, up 162.6% from 2017.

India Inbound M&A Beats Annual Record in 2017

Foreign firms acquiring Indian companies reached US$55.8 billion in 2018, a 77.0% increase in deal value after surpassing annual record volume in 2017 (US$31.5 billion).

US-based Walmart Inc’s acquired Flipkart Group, a provider of online ecommerce retail services, from Softbank and Naspers Ltd, for US$16.0 billion. The deal pushed the Retail sector up to capture 33.1% of India’s inbound M&A activity for a total of US$18.5 billion, a significant increase compared to last year (US$1.7 billion). Materials and Healthcare sector followed behind with 17.2% and 12.3% market share, respectively.

The United States is currently the top acquirer of Indian companies in terms of value and number of announced deals. United States acquisitions in India totaled US$22.7 billion, up 273.5% from a year ago, and accounted for 40.6% of India’s inbound M&A activity. Luxembourg, United Kingdom and Canada followed behind with 12.2%, 9.1% and 7.7% market share, respectively.

India Outbound M&A Hit 8-Year High

Indian acquisitions overseas stood at US$13.4 billion so far this year, a 418.4% increase in value from last year, as number of outbound deals grew 13.0% compared to 2017. This is the highest annual period for India outbound M&A since 2010 (US$29.1 billion).

India’s outbound acquisitions focused on the Materials sector as deal value reached US$7.6 billion, and captured 56.7% of India’s foreign acquisitions. High Technology followed and took second place, accounting for 16.2% market share as deals totaled US$2.2 billion. Healthcare rounded out the top three with 10.6% market share worth US$1.4 billion. UPL Corp Ltd, ultimately owned by UPL Ltd, definitively agreed to acquire the entire share capital of Arysta LifeScience Ltd, from Platform Specialty Products Corp, for an estimated US$4.2 billion.

The deal bolstered United States as the top most targeted nation in terms of value with 58 deals worth US$10.5 billion, or 78.1% market share. United Arab Emirates took second place with 6.8% market share. United Kingdom accounted for 3.7% market share of India’s outbound activity.

Completed M&A Advisory Fees in India Up 17%

M&A advisory fees from completed transactions in India totaled US$298.4 million in 2018, a 17.4% increase from last year. Goldman Sachs currently takes the lead in the imputed fee rankings on M&A advisory work related to completed M&A deals in India for 2018 with US$74.5 million, capturing 25.0% market share of the fee pool.