Mergers and acquisitions in India fell to 3-year low in first 9 months

02, Oct. 2020

Firms from the United States were the most active foreign investors in India. The size of their acquisitions doubled to $16.6 billion from a year ago. (Photo Courtesy of Pixabay)
Firms from the United States were the most active foreign investors in India. The size of their acquisitions doubled to $16.6 billion from a year ago. (Photo Courtesy of Pixabay)

NEW DELHI, NNA- Merger and acquisition (M&A) deals in India fell to a three-year low during the first nine months of this year as investors turned cautious amid uncertainties brought about by the COVID-19 pandemic.

According to financial market data provider Refinitiv, the total value of transactions fell 1.5 percent to $68 billion, the lowest since 2017. The number of deals also decreased by 14.4 percent year-on-year.

Domestic deals were worth more than half the size, totalling $32.3 billion. Inbound transactions came up to $28.4 billion while outbound ones amounted to $3.3 billion.

“As the disruptions brought by the COVID-19 pandemic remains a concern for companies and the economic cost caused by widespread lockdowns continue to provide uncertainties, deal making activity in India fell to a three-year low during the first nine months of this year,” Elaine Tan, senior analyst at Refinitiv, said in an email statement to NNA.

Although the coronavirus crisis had affected most sectors, it also brought attractive pickings because of consolidations, privatizations and asset sales, Tan noted. Strategic and private equity investors moved fast to seize opportunities in the more promising sectors like technology and telecommunication.

Refinitiv noted that companies from the United States were the most active foreign acquirers in India. They doubled their acquisition to $16.6 billion from a year ago, capturing 58.5 percent of inbound market share.

Facebook Inc., through its wholly-owned subsidiary Jaadhu Holdings LLC, snapped up a 9.9 percent stake in India's Jio Platforms for $5.7 billion. Google International, a unit of Alphabet Inc., also bought a 7.73 percent stake in Jio for $4.5 billion.

Outbound M&A activities witnessed the United States emerging as a key investment destination for Indian companies.

“The United States was the top most targeted nation in terms of value as well as number of acquisitions from Indian companies with 30 deals worth $3.3 billion,” said Refinitiv, adding that the top three sectors were energy and power, telecommunication and finance.