New Delhi: The first half of 2020 saw domestic merger and acquisition (M&A) deals worth 12 billion dollars — more than half of the total M&A value over the last six months, according to a new report by PricewaterhouseCoopers (PwC).
Facebook’s investment worth 5.7 billion dollars in Jio Platforms was the largest deal in the first half of 2020. It highlighted India’s maturing e-commerce space and attracted the interest of several global investors who then jumped on the bandwagon.
In addition to Facebook, Groupe ADP also contributed to inbound activity this year as it finalised its 1.5 billion dollars investment in GMR Airports.
A majority of the consolidation this year took place within the banking space. The infusion of 1.4 billion dollars into Yes Bank by the consortium of banks led by the State Bank of India (SBI) was one of largest deals this year.
Similarly, Adani Ports agreeing to invest 1.4 billion dollars in Krishnapatnam port was another key stressed acquisition in H1 2020.
PwC said a significant portion of this consolidation is driven by stressed situations, a trend that is likely to
continue for the rest of year.
“With a number of businesses facing challenges related to cash flows and investors looking for assets at attractive valuations, consolidation is likely to continue driving deal activity this year.”
With supply chains being disrupted worldwide, companies could look at India as the next global supply chain hub among Asian countries, said PwC.
This could boost inbound activity in India and also provide much-needed support to the manufacturing space, including micro, small and medium enterprises (MSMEs).
However, uncertainty appears to be the underlying theme for 2020 with several private equity houses and strategic players shelving their investment plans. However, a number of investors continue to view India as a key investment
destination, echoing confidence in India’s potential.
Deal activity in 2020 is expected to remain uncertain and largely dependent on how quickly the economy recovers, said PwC.
While the Covid-19 crisis continues to grow in India, deal activity could pick up towards the end of the year if business operations regain some normalcy, provided the spread of the disease is adequately contained.