India Inc has certainly been on a high when it comes to the number of M&A deals on foreign shores but the global financial crisis has led to a sharp decline of over 76 per cent in the valuation of such transactions in April-August this fiscal.
According to a new study by industry chamber Assocham, the slowdown has severely hit deal valuations in the ITeS, telecom, power and pharma sectors, where Indian companies recorded 72 outbound M&A deals worth $ 3.72 billion between April-August this fiscal.
This marks an increase in terms of number of deals from 54 in the same period last year, but in terms of valuation it has dropped to nearly one-fifth from $ 15.54 billion between April-August 2007, Assocham said.
Despite the global slowdown, which has adversely affected IT and ITeS sector the most, a total of 32 M&A activities happened between April-August 2008. Of this five were inbound, 18 outbound and nine domestic. This was followed by pharmaceutical sector, in which five inbound, 11 outbound and five domestic M&A took place, Assocham President Sajjan Jindal said.
In telecom, of the total 15 M&A activities, three are inbound, nine outbound and three domestic. In power sector, only two outbound and one domestic M&A happened during the period, the chamber said.The study added that the number of M&A activities in the past five months shows that the pharmaceutical industry is all set to take on the global markets. There were 21 M&A deals in the sector from April-August, valued at $ 5.25 billion, representing a 38.69 per cent share in total valuation of the M&A deals that occurred during the period.