India Inc's has recorded 162 merger and acquisition (M&A) transaction worth $17.5 billion in the first six months of 2016, as M&A activity eased in line with a slowdown experienced in deal-making in the Asia-Pacific region, according to Mergermarket H1 India deal report. Compared to historical high in the same period a year ago, the deal count was 26.7% fewer and in value terms 4% lower compared to deals worth $18.2 billion in 2015. Technology, pharma, medical, biotech, energy, mining & utilities were the top sectors to see a significant decline in deal volume.
The report noted that technology was still one of the most active target sectors by deal count, despite dropping to 26 deals at $2.3 billion in the first half, compared to 42 transactions valued at $1.5 billion in the year-ago period. Construction sector occupied the largest market share of 20.5% by deal value, recording seven deals worth $3.6 billion in the first half of this year, compared to eight deals worth $0.8 billion in January-June period of 2015. Report added that India's inbound activity during the first six months of 2016 recorded 82 deals worth $8.9 billion, up 21.9% by value from the first half of 2015, when deals worth $7.3 billion were announced. Whereas, outbound activities bounced back from the two-year low seen in the January-June period of 2014, standing at $2.5 billion, up 97.5% on a year-on-year basis.
As per the report the long term momentum looks bullish and a substantial growth by deal volume and deal value will be anticipated as the Modi government has committed more infrastructure spending and relaxed FDI (foreign direct investment) rules in the construction sector. However, for now mega-deals would be rarely seen, as investors are waiting for construction projects to achieve stable cash flow. It further said that in the next six months, attention could be drawn to the construction and the renewables sectors. Following Brexit, Indian conglomerates may consider cashing in some of their overseas investments to brace for upcoming changes in policies and regulations.
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