Dealmaking picked up the pace in May with the month recording an increase across both mergers & acquisitions (M&A) and private equity investments after muted activity in April this year.
Private equity and venture capital funds, who have had a busy start to calendar year 2011, closed 45 deals worth $1.31 billion as compared to 32 deals worth $563 million during the same period last year. This represents a 133% jump in deal value and a 40% increase in terms of deal volume as compared to the same period last year according to VCCEdge, the financial research platform of VCCircle. May also recorded an uptick in PE/VC deals as compared to April which recorded 43 deals worth $804 million.
But this was tempered by M&As. May saw both M&A deal value and volume slipping with 59 deals worth $4.1 billion as compared to 70 deals worth $7.05 billion during the same period in 2010. This represents a 42% fall in deal value and a 15.8% fall in volume. But the month saw a 45% increase in deal value as compared to April 2011, when it reached $2.84 billion.
One of the most significant deals of the month was the acquisition of business process outsourcing company Intelenet by UK’s Serco for £385 million ($634 million or Rs 2,850 crore). The deal was the first exit in India for private equity major Blackstone, besides being the largest PE exit till date this calendar year. The deal could serve as a benchmark for future transactions involving private equity owned outsourcing firms like WNS and Genpact, among others.
May 2011 saw the highest amount of deal volume in the last six years, across angel, venture capital and private equity investments. The month saw 17 angel/venture capital deals worth $65 million, besides 28 private equity transactions worth $1.25 billion. While growth capital deals continue to dominate the PE/VC space, the increasing number of venture capital deals represents healthier returns for the industry.
The median deal size increased to $14 million from $5 million with average deal size nearly doubling to $39 million from $20 million during the period.
May also saw five deals over $100 million with infrastructure segment accounting for four of these transactions. Largest deals were Morgan Stanley Infrastructure Partners committing $200 million in a joint venture with Isolux Corsán Concesiones to develop road projects. Another large deal was Standard Chartered Private Equity, Jacob Ballas and JM Financial Old Lane Capital investing $200 million in GMR Infrastructure's airport holding company.
On the M&A front the deal volume was dominated by domestic deals while the outbound deals represents the bulk of transaction value. Leading the charts is Adani Group-owned Mundra Port and Special Economic Zone's $2 billion acquisition of Abbot Point Port in Australia. While there were 31 domestic deals (worth $540 million), there were 9 inbound transactions ($1.27 billion) and the remaining 19 outbound transactions ($2.3 billion).
While the median deal size increased from $20 million to $25 million as compared to last year, the average deal size slipped to $137 million in May 2011 from $191 million in May 2010.
While Mundra-Abbott Point and Serco-Intelenet deal were the largest transactions during the month, other large inbound deals included Schneider Electric SA buying 74% in inverter and battery maker Luminous Power for $310 million and Johnson & Johnson buying JB Chemicals & Pharmaceuticals' Russian over-the-counter products business for $260 million in cash. The sale includes cough syrup brands Doktor Mom and Rinza.