Merger and acquisition (M&A) deals in India for the first half (H1) of 2016 stood at $23 billion, of which domestic and outbound transactions accounted for nearly 70 percent totalling $15.7 billion.
Together the two transactions -- domestic and outbound -- increased by 1.6 times from H1 of 2015, said the Dealtracker report by Grant Thornton, a tax and advisory firm. Prashant Mehra, a partner at the firm, said the M&A activity during the period was largely an outcome of domestic optimism.
Deal activities amongst domestic companies contributed 25 percent of the total M&A volumes â€”driven mostly by consolidation seen among the country's start-ups. Outbound transaction too was led by Indian biggies, particularly from three sectors namely energy, manufacturing and IT and ITeS space, which shared 58 percent of the total deal value, reported Bloomberg.
While energy and IT sector's M&A activity primarily targeted overseas companies or businesses, manufacturing deals were mostly confined to Indian borders.
India's manufacturing space was driven by expensive consolidation seen within the cement industry with Ultratech Cement acquiring Jaypee's cement business for Rs. 16,124 crore ($2.4 billion) and Birla Corp's deal with Reliance Cement for Rs. 4,800 crore ($714 million).
Indian Oil Corporation, Oil India and Bharat Petroleum Corporation Limited acquired a stake forking out $1.3 billion for Russia's Tass-Yuryakh oilfield. Similarly, IT services company Wipro invested $460 million in the U.S. based Healthplan Services.
The Bloomberg report noted that $3.9 billion worth of deals were inbound, while $3.1 billion was outbound among the cross border investments witnessed in H1 2016. It added, however, the inbound transactions hit a 6-year low as implications from global polity and Brexit referendum loomed large.
For the H2 of 2016, Mehra told moneycontrol that "with a few large transactions in the pipeline and macro-economic factors looking stable, transaction volumes are likely to grow" across all three transactions: domestic, outbound and inbound.