With $54.7 billion, 2017 M&As off peaks still second best on record


Led by telecoms and energy, the deal street closed 2017 at USD 54.7 billion, which is marginally lower than the USD 59.7 billion notched up in the previous year, says a report.

According to a Mergermarket report, telecoms (the USD 12.4 billion Vodafone-Idea merger), technology and financial services were the top three sectors in terms of deal value and all three witnessed an increase compared to 2016.

But the report incidentally excludes the largest deal in the country’s history-the USD 12.9 billion sales of Essar Oil to Russia’s Rosneft in August. Had it been included, the total value would have been historic at USD 67.6 billion.

“Telecom played an important role since the first quarter of 2017. The value climbed 28.4 times to reach USD 20.4 billion from USD 718 million, with the deal count increasing from three in 2016 to 11 in 2017. The sector contributed 37.2 percent of the total deal value, which was only 1.2 percent in 2016,” the report said today.

The second largest deal in the telecom space was Reliance Jio paying USD 3.7 billion to acquire the wireless spectrum, towers, fibre and media convergence node assets of the crippled Reliance Communication.

According to the report, energy, mining and utility spaces saw a decline in both value and volume compared to 2016. It plunged 69.4 percent in value to USD 5.3 billion across 44 deals. This wouldn’t have been so had the report included the Essar Oil-Rosneft deal of USD 12.9 billion.

The largest deal in the sector was Adani Transmission’s USD 1.9 billion acquisition of the Mumbai distribution business from Reliance Infrastructure. Among 31 deals, 30 involved energy, and of which 23 fall under the renewable energy space and fetched a total value of USD 2 billion in 2017.

With government setting targets which would take the total renewable capacity to 175 gw by the end of 2022, more deals are likely to happen in the development of clean energy in 2018, the report said.

The total deal value in the financial services space rose 34.3 percent to USD 6.9 billion from USD 5.1 billion in 2016, while deal count declined slightly to 40 compared with 45.

The largest deal in the sector was the USD 2.4 billion acquisition of Bharat Financial Inclusion by Induslnd Bank. And with ongoing consolidation, more deals are likely among NBFCs, especially insurers, making 2018 stronger.

However, outbound deal value continued to fall for the second consecutive year from USD 5.1 billion in 2015 to USD 4.6 billion in 2016 and USD 2.9 billion in 2017. Also, all the deals announced were below USD 1 billion and the largest was Motherson Sumi USD 731 million acquisition of Finland-based PKC Group.

On inbound deals, the report said after a record-breaking 2016 (195 deals worth USD 30.3 billion), activity (187 deals worth USD 23.5 billion) saw a slip in both value as well as volume in 2017.

The top three inbound deals amounted to USD 5.4 billion or 23 percent of the whole year value – all three within the technology sector. More importantly, in terms of annual value, 94.4 percent of M&As among technology targets was conducted by overseas investors.

American companies maintained their lead in terms of deal count, investing in 66 transactions worth USD 8.9 billion, which was an increase of 102.4 percent in 2016 in eight deals.

Chinese came in second in value at USD 1.4 billion, up 56 times from USD 25 million in 2016.moneycontrol