M&A deals in 2016 soar to record 5-year high at USD 61.44 billion

India's mergers and acquisitions (M&A) deals surged to a record 5-year high at USD 61.44 billion (about Rs 4 trillion) in 2016, says a report.

According to the latest report by News CorpVCCEdge, the number of M&A deals remained robust this year with 1,002 such transactions worth USD 61.44 billion.

The deal value in 2016 is not only a record five-year high but is also 159 per cent more than USD 23.71 billion witnessed from 995 deals in 2015, the report said.

As per the report, there were 633 domestic M&A deals amounting to USD 32.77 billion -- a jump of over 278 per cent in value terms -- in 2016.

Besides, inbound deals (143) value surged over 133 per cent this year to USD 18.78 billion, while outbound deals saw a 8 per cent dip to USD 4.9 billion in value terms.

"The hike in the M&A deal value can be attributed to the three deals worth USD 27.7 billion which includes, Essar Oil Ltd, Max Life Insurance Co Ltd and RelianceCommunications, Wireless Telecom Business acquisitions contributing 45 per cent of the overall deal value," it said.

Private equity investors unlocked investments worth USD 6.79 billion across 239 exits in 2016. This is nearly 17 per cent more in value terms compared to 2015 and also is the highest in the past five years, the report said.

The year gone by was also a record year for initial public offers and fund raising through such issues surged to a five-year high at USD 4.12 billion across 93 IPOs.

"While M&A activity perked up in 2016 due to a few multi-billion dollar deals that firms struck either to slash debt or consolidate their market share, what we are seeing is the flow of angel/seed money into enterprises in sectors like fintech, healthcare, education and travel which will continue into 2017," News Corp VCCircle CEO Nita Kapoor said.

"There is a huge funding opportunity for start-ups operating in these sectors that succeed in delivering a good consumer experience," Kapoor added.

Angel and seed investors drove the deal activity during the year, contributing 57 per cent of the total private equity investments in 2016.
"This figure stood at 32 per cent in 2012 and has been rising every year. They accounted for 748 deals amounting to USD 324 million," the report said.

The number of PE deals slumped almost 25 per cent to 1,309 deals, while the value of such transactions dropped by 44 per cent to USD 12.38 billion, for the period under review.

"Early stage investments in start-ups has shown a significant decline of 39 per cent to USD 1.59 billion in the year gone by, as compared to USD 2.62 billion in 2015," it noted.