Deal activity in India improved for the month of August as compared to July, with the total value of mergers & acquisition (M&A) moving up sharply even as the private equity (PE) deal value took a hit in the absence of big-ticket transactions.
The number of deals across PE & M&A improved both year-on-year and month-on-month with the total number of deals crossing the 100 mark after falling in July, according to early numbers from VCCedge, the financial research platform of VCCircle.
Total PE & M&A deals stood at $3.2 billion across 107 deals in August, as compared to 2.34 billion across 93 deals in July.
M&A deal value almost doubled month-on-month after hitting its lowest for the calendar year in July even though there were no billion-dollar deals. M&A deal value stood at $2.65 billion across 65 deals during July, 2011, representing 58 per cent fall in value but a 13.5 per cent increase in volume, as compared to the same period last year.
In August, 2010, there were 57 M&A deals worth $12.7 billion, with several multi-billion transactions like London-listed mining company Vedanta Resources $8.5 billion takeover of Cairn Energy's India unit and Adani Enterprises' $2.7 billion deal to buy Galilee Coal Tenement.
Also, the action in terms of deal volume has shifted to domestic transactions although inbound and outbound deals continue to hold over 50 per cent of deal value. Around 47 per cent of the total value (worth $1.25 billion) was generated by domestic deals, as compared to a meagre 3 per cent ($344 million) in August last year. There were 41 domestic deals, 11 inbound and 13 outbound deals.
The M&A numbers for the first eight months of this calendar year stand at $37.25 billion across 522 deals.
Large deals during August include cash-rich Piramal Healthcare's purchase of a 5.5 per cent stake in Vodafone Essar for $640 million, GMR Energy's for a 30 per cent stake in Indonesia's PT Golden Energy Mines Tbk and French food products giant Danone's of the nutrition business of the Wockhardt Group.
Private Equity & Venture Capital
Private equity and venture capital deal value was down by over 58 per cent to $551 million across 42 transactions, even as the deal volume increased, as compared to the same period last year. In August, 2010, there were 37 deals worth $1,324 million. The total PE/VC action for the calendar year 2011 till August stands at $7.4 billion across 324 private equity and venture capital deals.
Even though the overall volumes fell, interest in venture capital deals continue as the VC deal value increased 66 per cent. As many as 14 VC transactions worth $90 million were recorded in August, 2011, as compared to 13 deals worth $54 million in August, 2010.
Major deals included Tiger Global Management leading a $13 million series-C round in pre-owned vehicle sales portal MotorExchange and enterprise backup solutions provider Druva getting $12 million for its series-B.
There was only one deal of over $100 million during August 2011, with microfinance firm Bhartiya Samruddhi Finance raising $180 million from its PE investors and banks though various instruments. Other large deals were KKR along with Faering Capital investing in Avantha Power & Infrastructure besides Ascent Capital investing in Karaikal Port.
Exit volumes also fell by over 60 per cent during August while value increased only marginally to reach $200 million as compared to the same period last year.