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M&As continue to click, June sees 51 deals worth $5.35 bn

Amid apprehensions of economic slowdown, India Inc. seems to have resorted to mergers & acquisitions to keep their business going. The number of M&A deals announced in June stands at 51 with value at $5.35 billion, as against 49 deals and $2.92 billion in May, reveals Dealtracker, a monthly report by Grant Thornton.

According to the report, the most significant deal was Japan’s Daiichi Sankyo Co. acquiring 34.8 per cent stake in Ranbaxy Laboratories Ltd. for $2.40 billion. This is followed by GMR Infrastructure Ltd ’s acquisition of 50 per cent stake in Netherlands based InterGen NV for $1.10 billion.

There were 20 domestic deals (both acquirer and target company being Indian) with an announced value of $1.01 billion and 31 cross-border deals with an announced value of $4.33 billion. Nineteen of the cross border deals were outbound, where Indian companies acquired business outside the country and valued at $1.90 billion. Twelve were inbound deals where international companies or their subsidiaries bought Indian business with an announced value of $2.44 billion.

The total number of M&A deals during the first six months of 2008 stands at 265 with value at $18.54 billion as against 335 deals amounting to $ 43.97 billion in the corresponding period in 2007.

“Global M&A value for H1 2008 has been reported to be about $1.5 trillion, a reduction of about 35 per cent over H1 2007. India accounts for $18.5 billion of the $1.5 trillion. Most other regions in Asia Pacific such as China, Hong Kong, Australia, South East Asia have shown an increase in deal value.”

Uncertainty prevailing in the Indian market did not impact sentiment of private equity players in June, at least in terms of numbers.

The total number of private equity deals announced during the month was 24 with an announced value of $1.15 billion, as against 14 deals amounting to $1.45 billion in the month of May. The number of PE deals during the first six months of 2008 was 194 worth $7.54 billion, as against 195 deals amounting to $6.77 billion during the corresponding period in 2007.

“The rise in number of deals despite fall in value suggests that PE activity is picking up and it is a positive sign. PE players always take a long term view and this shows the Indian story continues to remain quite positive. The current market situation gives PE players a good opportunity to invest,” said Sanjay Randhar, director, India Knowledge Fund managed by S S Venture Services.

On the IPO front, however, the situation remains gloomy. In June, there were four issues which raised a sum of $76.79 million from the public. Funds raised through 29 IPOs during the period Jan-June 2008 was $4,064.78 million.

The most significant IPO in terms of capital raised was $34.90 million by Gokul Refoil and Solvents Ltd, followed by Anu's Laboratories Ltd at $ 20.06 million.

Source: Economic Times

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