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Recap 2013: M&A deal counter revives; PE/VC firms back fewer firms with more money

02 January, 2014

Corporate deal activity in India saw a better year with both strategic acquirers and private investors announcing transactions well into the fag end of the year. While mergers & acquisitions (M&As) revived after hitting a three-year low in 2012, private equity (PE) and venture capital (VC) investors backed a few companies but committed more capital than they did in the previous year, reflecting a cautious stance in expanding the roster of firms in their portfolio.

In total, there were transactions worth $35.8 billion this year across M&As, PE, VC and angel investments as against deals with a declared value of $28.7 billion in 2012, as per early information collated by VCCEdge, the data research platform of VCCircle. The actual value of deals in both the years would be higher as transaction terms of a few deals are not announced.

The total tally includes some investments made in multiple tranches, PE investment through the secondary market in bourses as well as intra group amalgamations besides plain vanilla asset purchases and growth capital investments.

Here’s a quick recap of the year in terms of deals.

M&As

There were a total of 786 deals worth $25.7 billion which were announced or closed during the year. This marked a rise in terms of both volume of transactions as well as the quantum of money involved in the deals as the country witnessed M&As worth $19.2 billion spread across 762 deals in 2012.

The value of M&A deals in particular hit a three-year low last year which rose sharply in 2013 with a clutch of billion dollar deals as also some not so big but significant transactions such as Etihad’s stake purchase in Jet Airways and Tesco’s proposed deal to buy stake in Tata group’s hypermarket chain Star Bazaar.

Oil & gas propped up the overall deal counter with ONGC Videsh and OIL India striking deals worth $5.6 billion in Mozambique and Brazil.

But there were also a few other large deals such as Unilever’s open offer for HUL, the restructuring at ACC-Ambuja, Mylan’s big deal to buy Strides Arcolab unit, Vodafone’s impending stake purchase from Piramal Enterprises and more.

PE

There were a total of 289 PE transactions worth $8.6 billion this year with 17 deals valued at $100 million or more, the same as last year. However, the overall PE investment was pegged at $8.4 billion spread across 353 transactions last year. This means fewer firms attracted more capital from PE investors.

The small increase in overall PE investment could be attributed to $1.2 billion attracted by Bharti Airtel from Qatar Foundation, the single largest PE deal in India in the last five years. This more than matched last year’s $1 billion deal where Bain Capital and GIC picked majority stake in Genpact.

VC

There were a total of 160 venture investment deals worth $1.2 billion against 188 deals worth $968 million last year. Flipkart’s $360 million funding skewed the overall charts as did its funding of $150 million last year. Snapdeal’s $50 million funding was yet another significant deal in the VC space this year.

Series A round of funding, which is a significant milestone signalling VC appetite for backing startups, sputtered with just 55 transactions worth $154 million against 88 deals with an announced value of $225 million last year.

Angel

The number of angel investments in startups, which typically come in as the first round of external funding for new ventures, also declined marginally from 211 to 200 but the value of such investments rose from $87 million to $112 million reflecting appetite to invest more. But many angel investments are not publicly announced; so the marginal drop in the number of such deals cannot be taken as a signal that startups are attracting fewer early stage backers.

Check here for our other year-end roundups for the deal ecosystem 

Recap 2013: Top trends in PE

Recap 2013: Top PE deals

Recap 2013: Top PE exits

Recap 2013: Most active PE investors

Recap 2013: Most active VC firms

Recap 2013: Top 5 funds raised during the year

Recap 2013: Top M&A deals

Recap 2013: Dealmaking in consumer space skids

Recap 2013: Transaction volume and PE money flowing into real estate shrink

Recap 2013: PE dealmaking in healthcare hits new high, M&As and PE exits also rocket

Recap 2013: Deal activity in IT sector slows despite marquee transactions in e-commerce

(Edited by Joby Puthuparampil Johnson)


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Recap 2013: M&A deal counter revives; PE/VC firms back fewer firms with more money

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