M&As halve to $34 bn so far this year on slowing economy


Mumbai: A slowing economy, protectionist policies and legal battles have taken the sheen off merger and acquisitions (M&As). Dealmaking in India, the third-largest M&A market in Asia-Pacific, nearly halved to $34 billion in the first six months of 2019. The number of deals declined to 183 from 234 in the same period.

Inbound deals were down 53% to $12 billion, while outbound transactions halved to $1.4 billion in January through June 2019, according to Mergermarket. Private equity buyouts declined 46% to $4 billion across 42 deals. Private equity exits, which had rebounded in the first quarter of 2019, shrunk 93% to $2 billion across 23 deals, as against $32 billion across 36 deals in the first six months of 2018.

India’s economic growth cooled to 6.8% in fiscal 2019, its slowest pace of expansion in five years. However, the government expects growth to pick up as it increases spending and relaxes foreign investment norms in certain sectors, among other initiatives, to boost consumer demand, investment and jobs. It has projected a growth of 7% for fiscal 2020.


India couldn’t attract much foreign investment in the first half of 2019 despite China getting embroiled in a trade war with the US, because of its weak industrial base and protectionist rules, said Mergermarket. US buyers’ investment in India plunged 91% to about $2 billion across 30 deals, it said.

Certain deals like ArcelorMittal-Nippon Steel’s $6-billion offer for Essar Steel, though announced, are yet to be concluded as they are stuck in legal tangles.

A pocket that experienced large dealmaking was financial services. M&As doubled to about $10 billion in this sector during the first half of 2019. Transactions include the $3-billion merger of Bandhan Bank and Gruh Finance, and Power Finance’s purchase of a majority stake in REC for $2 billion.

Mergermarket said that with the Indian government putting its thrust on infrastructure and manufacturing, it expects more inbound deals in the industrials space in the following months of this year.

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