Professional Documents
Culture Documents
Sector focus
1. Cement and building products............................................................................................10
2. Financial services..............................................................................................................12
3. Infrastructure....................................................................................................................15
4. Oil and gas.........................................................................................................................18
5. Pharmaceuticals................................................................................................................20
6. Retail and consumer products............................................................................................22
7. Telecom.............................................................................................................................25
8. Technology........................................................................................................................27
M&A Outlook.........................................................................................................................30
Appendices...........................................................................................................................32
Methodology.........................................................................................................................35
The M&A activity in India over the past year was positive, owing to a large number of big-ticket
announcements that drove total deal value to a record level, when evaluated over the previous
six year timeframe. The cumulative domestic disclosed deal value also registered its highest
level ever.
The cross-border deal activity also saw an increase despite global headwinds, such as Brexit
and policy uncertainty in the US that impacted global currencies and capital markets. The
inbound deal value soared significantly, on account of a US$12.9 billion announced acquisition
of Essar Oil Limited by Russia-based Rosneft-led consortium, which is the largest ever single
foreign direct investment.
The consistent focus on consolidation continued to be a dominating theme for M&A across
sectors including insurance, online retail and telecom. Divestments and restructuring by Indian
companies played a noticeable role in the M&A activity, which was evident from businesses’
incremental focus on de-leveraging balance sheets and streamlining of their operations.
Companies from the power, cement and telecom sectors disposed-off their non-core assets
Amit Khandelwal with an eye on reducing their debt burden and channelling liquidity into their core businesses.
National Director and Partner Digitization also continued to be a major contributor to domestic M&A, with traditional brick
Transaction Advisory Services and mortar and online retail companies, along with financial services players, acquiring
Ernst & Young LLP companies with specialized technology that not only complemented their business models but
also played a critical role in driving future business growth.
Cross-border activity was dominated by mega deals, especially in the oil and gas sector. While
the inbound deal value was up, the volume was muted. However, the outbound activity gained
both in terms of value and volume.
We expect the M&A activity to stay positive through 2017. Domestic activity should
strengthen further due to a continuous consolidation across sectors. Additionally, business
risk imperative to innovate will drive acquisition activity in the technology space. Lastly,
cross-border activity is expected to stay vibrant across sectors like oil and gas, technology,
pharmaceuticals and media and entertainment. All these aspects are expected to lead to
vibrant M&A activity in 2017.
Overall deal value records a new • On the cross-border front, the deal value recorded an
increase of 127% y-o-y, reaching US$31.1 billion in 2016
high since 2010 from US$13.7 billion in 2015, on account of four mega-deals
(US$1 billion and above). These mega-deals contributed
• In 2016, the overall M&A activity was robust owing to a about 63% of the total cross-border deal value. However,
resilient domestic economy and stable capital markets. there was a decline in the total number of deals, decreasing
The deal value during the year reached a record high at to 362 from 404 in 2015.
US$56.2 billion (as compared to US$30 billion in 2015) since
2010. This increase in deal value was noticeable across all • The rise in cross-border deal value can be primarily attributed
transactions - domestic, inbound and outbound. to a quantum leap in inbound deal value, which increased
to US$21.4 billion in 2016 from US$9.9 billion in 2015,
• Interestingly, the year saw 60 restructuring deals worth highlighting India’s continued attractiveness for foreign
US$7.7 billion as compared to 44 deals worth US$4.3 billion players.
in the previous year. Excluding these deals, the value for
the year stood at US$48.5 billion, which is still the largest • The oil and gas sector led in terms of the deal value, followed
value over the past six years. On the volume front, the year by the financial services sector. The deal that pushed the oil
witnessed a marginal decline of 2% y-o-y (year-on-year), and gas sector to this leading position in terms of value was
clocking 867 deals, as compared to 887 in 2015. However, the largest deal of the year — the US$12.9 billion announced
the volume witnessed an increase when compared to 2014 acquisition of Essar Oil Limited (98% stake) and Vadinar
(794 deals) and 2013 (762 deals). port by Russia’s state-controlled petroleum giant Rosneft
Oil Company led consortium. From a volume perspective,
• Domestic deals continued to dominate the Indian M&A the technology, infrastructure and financial services sectors
landscape, as home-grown companies chose the inorganic dominated the charts, accounting for nearly one-third of the
route to generate growth in an environment that was total announced deals in 2016.
conducive to deal-making. With 505 deals worth US$25.1
billion, these deals accounted for 58% and 45% of total
volume and value, respectively.
Number of deals
887 867 900
US$ billion
60 835 The year saw domestic deals worth US$25.1 billion, the highest
794
762 56.2 800 yearly value on record. On the volume front, 2016 registered
30 505 deals, an increase of 5% against 2015. Consolidation deals
28.4 30.0 700
27.2 27.4 by Indian companies formed a significant part of the domestic
- 600 deal activity.
2012 2013 2014 2015 2016
Deal value (US$ billion) Number of deals India’s M&A market witnessed consolidation across sectors as
companies divested distressed assets in an effort to reduce
Source: EY analysis of Thomson ONE data
debt. On the other hand, corporates with stronger balance
sheets were seen deploying funds towards acquisitions and
consolidating their market position. Amidst a business-friendly
Exhibit 2: Five most active sectors by deal value in 2016 climate anchored on a stable macroeconomic environment,
25,000 easing of credit conditions and continued progress on economic
19,615 policy reforms, Indian companies across sectors chose M&A as
20,000
US$ million
Financial
services
Cement and
building
products
Pharmac
euticals
Infrastructure
Infrastructure
Financial
services
Retail and
consumer
products
Professional
services
• The consumer products sector also continued to witness 2015 54% 29% 16%
By count
• Within the oil and gas sector, exploration and production 55% 33% 12%
2015
By value
US
UK
UAE
Germany
Singapore
primarily on the back of 12 mega deals (3 in 2015). This is the
highest number of mega deals recorded post-2010. Notably,
these deals accounted for 61% of the total deal value. The
Source: EY analysis of Thomson ONE data
majority of these deals were domestic in nature (8 out of 12),
accounting for 26% of the deal value, indicating solid business
confidence in the domestic markets. Two mega deals each were
witnessed on the inbound and outbound front. Restructuring deals gain traction during
Notably, three cross-border mega deals took place in 0il and
the year
gas sector, worth a combined value of US$18.4 billion. Leading Significant restructuring activity was seen during the year,
Indian oil companies have signed a number of deals with focussed on achieving portfolio optimization, operational
Russian players, adding commercial depth to the strategic ties efficiency and unlocking value for the shareholders.
between India and Russia. These deals reflect the government’s
resolve to push big-ticket oilfield acquisitions abroad with an A total of 60 restructuring deals with an aggregate disclosed
eye on boosting India’s energy security. value of US$7.7 billion were recorded during 2016, as
compared to 44 such deals worth US$4.3 billion in 2015. These
Exhibit 6: Five most acquisitive nations (in terms of deals constituted around 7% of the deal volume seen in 2016,
volume) of Indian companies in 2016 as compared to 5% in the previous year.
60 Mergers and stake/asset transfers within group companies were
50
a common phenomenon during the year. Some supporting
40 deals include:
21 20
20 16 • Dalmia Bharat and OCL India, two group companies of
12
Dalmia Bharat Group, approved their merger, a move that
0 will create the fourth largest cement maker in the country
Japan
France
Singapore
• National Aluminium Company Limited decided to buy back Online players are also making acquisitions
644.3 million shares or 25% of the paid-up capital from to expand market share
public shareholders for INR28.35 billion.
Consolidation continued to reign across deal activity in the
e-commerce segment as players sought to expand their scale
Digitization and disruptive technologies of operation, increase market share and gain access to new
driving new wave M&A technologies. Against this backdrop, online players increasingly
concentrated on acquisitions to meet the growing demand for
Increased focus on innovation enabled by an advances in online shopping and counter competition. Examples of such
technology and digitization is disrupting business models across deals include:
industries. At the same time, burgeoning internet penetration,
coupled with changing customer behavior and expectations, • PayU, an online payments company owned by South Africa’s
is creating pressure on traditional brick and mortar players to Naspers, acquired Mumbai-based payments technology
develop an online presence. As such, the corporate strategy of player, Citrus Pay, for US$130 million in an all-cash deal.
India Inc. will likely be guided by acquisitions in the digital space With this acquisition, PayU will be able to add more than 30
that enables them to keep pace with unprecedented disruption million people to its user base.
and sector convergence. During the year, we saw large IT • Flipkart-owned Myntra bought its rival Jabong in a US$70
companies acquiring emerging technologies as they sought to million all-cash deal to create India’s largest online fashion
introduce new capabilities, expand their digital businesses and destination.
innovate existing product offerings.
• Online food delivery platform Foodpanda’s acquisition of
Delivery.com’s Hong Kong business aimed at driving higher
growth in one of its key markets.
Number of deals
Limited agreed to acquire Gaussian Networks Private
US$ billion
400
Limited, the operator of online poker site adda52.com for 20
25.1 300
around US$27 million, marking its entry in the online gaming
space. 16.2 16.4 200
10 13.9
100
6.2
Mobile wallets see heightened activity, 0
2012 2013 2014 2015 2016
0
The year 2016 was a promising one for the cement sector, The sector saw big consolidation deals where debt-ridden
which recorded 17 deals with a total disclosed value of US$5.2 players divested their assets to repay loans. Leading domestic
billion, the highest yearly deal value on record. When compared players with healthy balance-sheets took advantage of this
to the previous year, the deal value increased more than three situation and bought such stressed assets to build capacities, in
times while the deal volume also grew by 21% y-o-y (14 deals in anticipation of demand improving in the future. Key examples
2015). The sector’s M&A activity was dominated by domestic include:
deals as the industry continued to witness consolidation • Sale of cement business arm, Reliance Cement Company
activity. Notably, domestic deals accounted for 82% of the Private Limited, of Reliance Infrastructure to Birla
sector’s deal volume. Corporation. for US$707 million, in a deal that will help
The cement industry includes a large number of cement Anil Ambani-led group to lower its debt burden.
manufacturers with many of these having small manufacturing • Orient Cement, a firm owned by the Chandra Kant Birla
units with an unfavourable cost structure. Cement players group, has agreed to acquire 74% stake in Bhilai Jaypee
have continued to add capacity over the last decade, anchored cement and Nigrie cement grinding unit in Madhya Pradesh
on expectations around India’s growth and its infrastructure from Jaypee group companies at an enterprise value of
needs. This has resulted in a significant oversupply of cement, around US$293 million. The deal will help the Jaypee group
leading to a low capacity utilization rate and consequent to trim some of its debt.
operational inefficiencies. On the contrary, the demand in the
industry remains sluggish, owing to a slump in the real estate During the year, we saw reorganization of a few big-ticket deals,
and housing market. Other operational challenges that include due to regulatory hurdles. One of the clauses of mines and
a rise in production costs (freight, energy and limestone) and minerals development and regulation (MMDR) act did not allow
6,000 14
5,239 crore during FY 2017-18. Hence, factors such as lower
4,000 mortgage and government initiatives such as “Make in
India”, “Housing for all by 2022” and the “Smart City”
2,000 1,147 1,154 programs should enable a pick-up in housing activity,
0 0 with potential to positively impact the demand for
2014 2015 2016
cement. We can expect a narrowing of the demand-
Deal value (US$ million) Number of deals supply gap over the coming years, thereby providing
Source: EY analysis of Thomson ONE data better pricing leverage to the industry players.
Regulatory reforms supported promoting the insurance industry and the need to upscale to
bring cost efficiency and increase customer base are the key
by growing digitization spurs drivers behind this trend. Given the push required to drive
growth in the sales of insurance policies, distribution network
deal-making becomes pivotal for the success of the business. During 2016,
In 2016, the financial services sector saw its highest ever yearly we saw certain deals/tie-ups taking place between insurance
deal value on record, at US$7.3 billion — a more than two-fold companies and banks to achieve a cost efficient distribution
increase as compared to 2015. However, the deal value was network and reach a wider customer base. These deals are
largely inflated due to two mega deals, which contributed expected to trigger further consolidation in the sector over the
around 83% to the total disclosed value. One of these deals coming year. Few examples include:
was an internal restructuring exercise carried out by the Aditya • HDFC Standard Life Insurance Company Limited, Max
Birla Group. On the whole, there were 8 internal restructuring Life Insurance Company Limited, Max Financial Services
transactions seen in the sector, accounting for around half of Limited and Max India Limited have agreed to merge their
the total disclosed deal value. Even on the volume front, the operations. As a part of the proposed transaction, Max
sector witnessed significant activity, registering 91 deals as Life will be merged into Max Financial Services, followed
compared to 75 in the last year. Dominant segments within the by a demerger of the life insurance undertaking from Max
sector included NBFC (27 deals; US$100 million), insurance (11 Financial Services into HDFC Life (the new merged entity).
deals; US$3.3 billion), capital markets (12 deals; US$83million) Max Financial, holding the residual business, will be absorbed
and payment solutions (8 deals; US$130 million). by Max India.
The market environment has been quite conducive for There were some deals in the health insurance space, anchored
consolidation in the rapidly growing insurance industry. on foreign financial players’ continued interest in the India
The heightened competition, regulatory reforms aimed at market, either by entering into a joint venture or by acquiring
Number of deals
and the government’s continued efforts to promote inclusive 8,000 75 7,297 80
US$ million
Cleantech and logistics segment increasing focus on clean energy sources. To encourage
private players to enter the segment, the government is
continue to provide solid ground offering various incentives such as generation-based incentives
(GBIs), capital and interest subsidies, viability gap funding and
for M&A activity concessional finance.
The Indian infrastructure sector clocked 92 deals with an Both local and foreign renewable energy players have shown
aggregate disclosed deal value of US$4 billion in 2016. an interest in acquiring clean energy portfolios in India. As per
Compared with 2015, deal value surged by nearly 78% from media reports, Japan’s Sumitomo Corporation and France-
US$2.3 billion, while deal count remained largely stable (93 based EDF have plans to set up manufacturing facilities in India.
deals in 2015). The increase in deal value was primarily due to The World Bank has also committed to invest nearly US$1
two mega deals recorded in 2016, as against no such deal in billion India-based solar energy projects. At the same time, the
the previous year, in the power sector. US-based PE player IFC agreed to invest US$125 million in Hero
Within infrastructure, the power segment (especially cleantech) Future Energies Limited, the renewable energy arm of the Hero
hogged the limelight as it cumulatively accounted for 53% of Group, to fund construction of its solar and wind power plants.
the total volume and 86% of the total M&A value of the sector. Domestically, the Adani Group opened the world’s largest solar
Logistics and transportation was another active segment, plant in Tamil Nadu in 2016, and Tata Power announced that it
constituting 23% of the total M&A volume. aims to generate as much as 40% of its energy from renewable
sources by 2025. NTPC also announced plans to become the
Clean energy continues to remain at the country’s largest renewable energy company.
forefront Industry wise, the renewable energy market is fragmented,
with a large number of small players. With the rapid growth
India’s heavy reliance on imported fossil fuels, a persistent
of the sector, large players are more interested in acquiring
shortfall in power supply and a global shift towards green
new and smaller players to increase their capacities. The
energy are acting as key triggers for the government’s
inorganic route is seen as a convenient way to expand
compared to time-consuming pre-development work and
• ReNew Power Ventures acquired two cleantech assets — • Online take-away delivery firm Foodpanda acquired the Hong
Shruti Power Projects Private Limited and Helios Infratech Kong assets of the US-based Delivery.com as it consolidates
Private Limited in separate transactions. its position in key markets while shedding assets elsewhere.
Number of deals
On the other hand, the sector also witnessed deals where sellers 93 92 100
8,000 85
US$ million
divested their assets to pare debt. While many companies have 5,624 80
6,000
entered the power segment over the last decade; issues such 4,041 60
as land acquisition hurdles, regulatory approvals, and delay 4,000
2,273 40
in environmental clearances have stalled many big projects 2,000 20
and led to cost escalation. This, coupled with highly-leveraged 0 0
balance sheets due to aggressive capex plans and adverse 2014 2015 2016
financing conditions, is exerting a drag on the already-indebted Deal value (US$ million) Number of deals
companies. Few examples of deleveraging deals include: Source: EY analysis of Thomson ONE data
• Orient Green Power Company agreed to sell its 20 MW
biomass plant in Maharashtra to Singapore-based Sindicatum
Captive Power for US$12.1 million. 2014 2015 2016
• SunEdison Inc. agreed to sell its Indian assets to Greenko Number of deals
Energy Holdings. Domestic 49 66 60
Inbound 29 21 25
Expansion drove deals in the logistics
Outbound 7 6 7
segment Total 85 93 92
Global as well as local players acquired Indian logistics
companies to strengthen their product offerings and expand Deal value (US$ million)
geographic coverage. With rising demand for transportation and Domestic 4,868 1,757 3,397
warehousing services especially by e-marketers, logistics is an Inbound 720 437 644
emerging segment with potential for growth. Some of the deals
Outbound 36 79 –
supporting this trend are as below:
Total 5,624 2,273 4,041
• Hong Kong-based Kerry Logistics Network Limited bought a
Source: EY analysis of Thomson ONE data
50% stake in Indev Logistics Private Limited, a Chennai-based
logistics company, for expansion purposes.
Oil and gas sector tops the On the inbound front, Russia’s Rosneft-led consortium
announced to acquire a 98% stake in Essar Oil Limited for
sector value charts with billion US$12.9 billion, through two separate agreements. The first
agreement saw the sale of 49% interest to Petrol Complex
dollar-plus deals Private Limited (a subsidiary of Rosneft) and the second
The year 2016 was a blockbuster for the oil and gas sector. included the sale of the remaining 49% to Kesani Enterprises
A total of 18 deals having a disclosed deal value of US$19.6 Company Limited (owned by 2 consortium players ) at an
billion were recorded, the highest deal value ever for the sector, enterprise value of US$10.9 billion. The buyers also agreed
on the back of the announced US$12.9 billion Essar-Rosneft to acquire Essar’s Vadinar Port for an additional US$2 billion,
deal. The sector also registered the most robust deal value taking the total deal value to US$12.9 billion and making it the
across all sectors. single largest foreign investment in the Indian refining sector
till date. This transaction was the biggest M&A deal in India and
also the largest outbound deal for Russia in 2016. The all-cash
Cross-border transactions involving Russian deal is expected to close in the first quarter of 2017. This
sale would enable Essar to trim its debt and support Rosneft’s
companies drove the sector’s activity
strategy to penetrate in South Asia for Russian downstream
Russia has been a long-standing partner of India with strong investments.
bilateral ties. The Indo-Russian relations have strengthened
During the year, we also witnessed some big-ticket outbound
over the years, with increasing cooperation across diplomatic
deals, driven by India’s consistent focus on ensuring its
and business areas including national security, trade, science
energy security. Deal-making in the sector was dominated by
and technology. In 2016, we saw a big push in Indo-Russian
public sector undertakings, since the government has been
ties with several big-ticket M&A deals in the oil and gas sector.
encouraging state-owned companies to aggressively pursue
Russia was a strategic partner in four cross-border oil and gas
acquisitions of energy assets overseas.
transactions — as an acquirer nation in one inbound deal and as
a target nation in three outbound deals.
15,000 60
On the domestic side, we can witness consolidation in
10,000 40 the E&P space. As per media reports, the government
16 18
5,000 9 20 is considering a merger of 13 state-held oil companies,
574 2,175 such as Oil and Natural Gas Corporation (ONGC), as
0 0
2014 2015 2016 well as IOC, BPCL, Hindustan Petroleum, GAIL, among
Deal value (US$ million) Number of deals others, into one big company that could compete with
the big global players. A merger of this size should alter
Source: EY analysis of Thomson ONE data
the industry dynamics and possibly trigger gradual
acquisition of relatively smaller players.
2014 2015 2016
Number of deals
Domestic 7 4 9
Inbound 2 2 4
Outbound 7 3 5
Total 16 9 18
Cross-border activity dominated The recent change in FDI regulations also augurs well for deal
sentiment, given that, brownfield investments of upto 74% (as
the sector against 49% earlier) are now allowed under the automatic route.
Two large inbound sterile injectable deals were announced this
The pharmaceuticals sector witnessed 51 deals being year, both of which have been in the making for a long time:
announced in the year 2016, with aggregate disclosed deal
value of US$4.6 billion. Outbound and domestic transactions • China-based Shanghai Fosun Pharmaceutical (Group)
drove most of the deal activity, with 21 deals each. In terms of Company Limited announced the acquisition of an 86% stake
disclosed deal value, outbound and inbound activity stood at in Gland Pharma Limited for up to US$1.26 billion.
US$2.1 billion each. Domestic deal-making was concentrated • US-based Baxter International Inc. entered into an agreement
in smaller value bands with an aggregate deal value of US$342 to acquire Claris Injectables Limited, a wholly owned
million, of which US$272 million (4 deals) worth of deals were subsidiary of Claris Lifesciences Limited, for US$625 million.
restructuring deals.
4,557 100
4,137 to reflect at a ground level. Nonetheless, we believe
US$ million
4,000 80
3,116 that the opportunity will open up in the medium to long-
60
term. This promise continues to inspire Indian pharma
2,000 53 51 40 companies to build/consolidate their positions in Japan.
48
20
Back home, domestic consolidation in the industry will
0 0
2014 2015 2016 continue. The pace of such consolidation, as always, will
Deal value (US$ million) Number of deals continue to be dominated by succession and wealth-
diversification related considerations, even though
Source: EY analysis of Thomson ONE data business fundamentals such as price controls and the
lack of product pipelines will also play its part.
2014 2015 2016
Number of deals
Domestic 20 21 21
Inbound 12 11 9
Outbound 16 21 21
Total 48 53 51
Domestic activity continues to top in per capita income. Significant activity was seen in the online
retail space that was driven by companies’ efforts to strengthen
the M&A charts their business models by combining offline and online platforms
and the consolidation seen in the sector. The sector might face
The retail and consumer products sector recorded a decline in short-term headwinds as the recent demonetization initiative
both, deal activity and deal value. The year witnessed 80 deals might have a negative impact, though temporary, on the sales
having an aggregate disclosed deal value of US$635 million, of online retail companies which are heavily dependent on cash
as compared to 97 deals with a total value of US$2.4 billion on delivery payments. However, in the long run, it will push the
in 2015. The dip in deal value was primarily due to missing consumers to opt for digital transactions, thus boosting the
big-ticket deal (US$500 million and above) activity in 2016, overall growth for the industry.
while the last year had seen two such transactions. Similar to
the trend seen in previous years, domestic deals continued Maximum activity was witnessed in the online fashion
to dominate the M&A activity in terms of volume, accounting marketplace and online restaurants/booking portals.
for nearly 63% of the total activity in the sector. On the value • Online fashion is in vogue. Online fashion provides an
front, domestic and inbound deals lead the show, contributing immense opportunity for new and existing players in the
53% and 46% to the total deal value, respectively. Prominent market. Considering it constitutes the highest volume
deals were seen across sectors, such as online retail, food and of online sales in India, Indian online fashion players are
beverage (F&B) and personal care and homecare. acquiring their peers to capture a larger market share and
derive synergies. On the other hand, brick and mortar
Online retail segment continued to dominate players are entering this space through acquisitions. Few
sector’s M&A examples include:
E-retail dominated the M&A activity of the sector, with 26 • Flipkart-owned, Myntra, bought its rival Jabong in a
deals having a disclosed value of US$200 million. It sustained US$70 million deal that created India’s largest online
the momentum witnessed last year with greater internet and fashion destination.
mobile penetration, a rise in online shoppers and an increase
Number of deals
97
• Online baby care store FirstCry (BrainBees Solutions 5,000 92 100
US$ million
80
Private Limited) has acquired the franchise division of 4,000 3,393 80
Mahindra Retail Private Limited, for US$54.3 million – a 3,000 2,415 60
move that is expected to help the company significantly 2,000 40
expand its offline presence. 1,000 635 20
0 0
• Online food industry is witnessing consolidation due to 2014 2015 2016
intense competition and a slowdown in investments. Deal value (US$ million) Number of deals
Amid the e-retail euphoria, food technology remained one
Source: EY analysis of Thomson ONE data
of the most talked-about segments in 2016. The culture of
eating outside is now accompanied equally by the comfort of
getting the food delivered at home, thereby providing a push
to the online food market. Online restaurant booking, online
2014 2015 2016
food ordering and delivery market is mushrooming with the
changing lifestyle of modern urban households, resulting in Number of deals
the abundance of many “me-too” players. Thus in order to Domestic 60 68 50
strengthen their presence and deepen their service/product Inbound 16 22 13
offerings, the players are making acquisitions or entering into
Outbound 16 7 17
partnerships with rivals. Few examples include:
Total 92 97 80
• InnerChef has acquired Bengaluru-based EatOnGo (on-
demand meal service) and Gurgaon-based Flavour Labs (a Deal value (US$ million)
food truck company).
Domestic 171 1,284 338
• Hello Curry Private Limited has acquired The First Meal to Inbound 3,110 1,131 292
enter the breakfast and meal box segment. Outbound 112 – 5
Total 3,393 2,415 635
The telecom sector recorded a healthy deal activity with 19 • Bharti Airtel entered into a definitive agreement with
deals having a total disclosed deal value of US$2.4 billion Videocon to acquire the rights to use 1800 MHz spectrum in
in 2016. M&A activity was largely distributed between six circles for US$659 million.
domestic (9 deals; US$1.2 billion) and inbound deals (7 deals; • Airtel has agreed to acquire rights to use 4G airwaves of
US$1.1 billion) with outbound deals (3 deals; US$0.1 billion) Aircel in eight telecom circles for US$524 million.
contributing the least. Bharti Enterprises was the most active
player in telecom M&A with eight deals worth US$2 billon. The During the year Indian telecom operators also explored the
player was seen making deals in spectrum and mobile-tower possibilities of monetizing their tower investments to fund
segments. their core businesses. The deals were aimed at reducing capital
expenditure on passive infrastructure and promoting sharing of
Intense competition drove the deal activity towers to enhance operational efficiencies. A few transactions
in this space included:
Deals for spectrum acquisition in the Indian telecom sector
were primarily driven by a need to consolidate 4G spectrum • Bharti Airtel Africa agreed to sell 950 mobile towers in the
by the players, owing to robust growth in data usage and also Congo to telecom infrastructure company Helios Towers
heightened competition due to the entry of new operator - Africa.
Reliance Jio. Additionally, given the cost of acquiring new • Bharti Airtel agreed to sell around 1,350 towers to American
spectrum and the growing competition also led to mid-market Tower Corporation in Tanzania through its subsidiary Airtel
players to look at consolidation to realize synergies and Tanzania.
gain market share to address competition from the bigger
players. Regulatory reforms such as the Department of
8,000 15
13 Additionally, they will now be able to monetize their
6,000 under-utilized spectrum, thus giving them ability to
10
4,000 realize their investments thus far. Given the operator
2,424
1,548 7,895 5 consolidation, we also expect 2017 to see continuing
2,000
monetization of tower assets by telecom companies and
0 0 independent tower operators, on the back of mounting
2014 2015 2016
debt-pressures.
Deal value (US$ million) Number of deals
Source: EY analysis of Thomson ONE data
Technology continued to lead the powerful and enables companies to improve their production,
efficiency and overall quality.
deal activity in terms of volume • IT players are increasingly acquiring SMAC capabilities
The technology sector recorded 106 deals having a cumulative to innovate their capabilities: SMAC is gathering a lot of
disclosed deal value of US$2.1 billion in 2016. Compared attention among technology players as increasing internet
with the previous year, deal volume declined by 8% (115 deals penetration is pushing players to innovate their capabilities.
recorded in 2015), while deal value rose by 49% (US$1.4 Within the technology sector, deals are aimed primarily
billion in 2015). Building on the previous year’s trend, deals at growing market share, enhancing service offerings and
with undisclosed value characterized the sector’s M&A activity addressing customers’ changing digital behaviors. Examples
in 2016 (72 deals out of 106). On the cross-border front, the include:
US continued to be the most active partner with the highest • Wipro Limited acquired Appirio Inc., a US-based cloud
number of inbound and outbound transactions. The US was services firm, for US$500 million.
engaged in nearly 50% of the cross-border transactions with
India (32 deals out of 62 deals). • US-based Boomtrain Inc. entered into an agreement
to acquire Nudgespot, a Bengaluru-based artificial
SMAC applications — redefining the way intelligence—driven messaging platform, for an undisclosed
businesses operate amount.
Number of deals
115
3,000 106 120
US$ million
• Voonik Technologies Private Limited acquired Dekkoh, a 98
fashion discovery platform. 1,976 2,083
2,000 80
1,398
• Apollo LogiSolutions Limited bought a controlling stake 1,000 40
in Wifin Technologies (India) Private Limited, a Chennai-
based mobile applications and solutions company. 0 0
2014 2015 2016
• Zomato’s acquisition of Sparse Labs, a logistics technology Deal value (US$ million) Number of deals
startup specializing in helping restaurants track delivery Source: EY analysis of Thomson ONE data
drivers.
• Nihilent Technologies Limited acquired ICRA Techno Source: EY analysis of Thomson ONE data
Analytics for US$10 million to expand its expertise
in analytics, data engineering, and business process
management.
India’s M&A to stay strong further strength across sectors. We could also see big-ticket
divestments by debt-laden companies, especially in capital-
The ongoing momentum in M&A activity is expected to continue intensive sectors such as power, cement, real estate and
as we progress through 2017, notwithstanding the short-term telecom among others, as banks take a stringent view on
drag that demonetization could exert on the economy. The M&A non-performing assets. In addition, the market will see an
environment in the country remains conducive on the back extensive focus on deals/strategic alliance/partnerships to
of a strong long-term economic outlook and healthy capital build technological capabilities and gain a competitive edge
markets. At the same time, easing of credit situation, along through online/mobile presence, data analytics competencies
with the government’s thrust on the country’s infrastructure etc., as new technologies continue to disrupt businesses across
will provide a boost to the capex cycle, thereby resulting in industries. In particular, the financial services sector is likely to
higher private investments. In addition, once the impact from see major action in the digital space as the economy transitions
demonetization stabilizes, a gradual recovery in domestic towards the cashless model.
demand along with steady progress on reforms, such as GST Outbound investments will continue to be led by the oil and gas
and Minimum Alternate Tax, should boost corporate earnings sector in the next year as well. India’s quest to secure supplies
and help businesses to create a war chest for inorganic growth. of natural resources is expected to gather pace, with the
Domestic activity is expected to remain robust. With scale government taking steps to encourage Indian players to acquire
expansion becoming a critical element of Indian corporates’ oil, gas and coal assets overseas. Furthermore, the ample
strategy agenda, consolidation deals are likely to gain availability of deep-value assets at attractive prices, amid global
40 253 300
248
233 223 229
209
Number of deals
30 197
200
US$ billion
162
20
12.1 12.9 13.9 21.8
100
10 7.5 7.6
4.0 6.4
0 0
Jan-Mar 15 Apr-Jun 15 Jul-Sep 15 Oct-Dec 15 Jan-Mar 16 Apr-Jun 16 Jul-Sep 16 Oct-Dec 16
Geography Month Target Target Acquiror Acquiror Value (US$ Target Sector
Country Country million)
Inbound Oct Essar Oil Limited India Trafigura Holding BV, Netherlands, 12,907 Oil and gas
(including Vadinar Rosneftegaz Russia
refinery)
Outbound Mar Taas-Yuryakh Russia Investor Group (Oil India 3,262 Oil and gas
Neftegazodobycha OOO, India Limited, Bharat
Vankorneft’ AO Petroleum Corporation
Limited and Indian Oil
Corporation)
Domestic Aug Max Financial Services India Housing Development India 3,194 Insurance
Limited - Life Insurance Finance Corporation
business Limited
Domestic Feb Jaiprakash Associates India UltraTech Cement India 2,424 Cement and
Limited - Cement Units Limited building products
(6)
Outbound Mar Vankorneft’ AO Russia Oil & Natural Gas India 2,198 Oil and gas
Corporation Limited
Domestic Jul Lafarge India Private India Nirma Limited India 1,400 Cement and
Limited building products
Domestic Jun Welspun Renewables India Tata Sons Limited India 1,382 Infrastructure
Energy Privated Limited
Inbound Jul Gland Pharma Limited India Shanghai Fosun China 1,260 Pharmaceuticals
Pharmaceutical
(Group) Company
Limited
Domestic Oct Krishna Godavari Oil India Oil & Natural Gas India 1,195 Oil and gas
Field Corporation Limited
Domestic Nov Videocon d2h Limited India Dish TV India Limited India 1,186 Media and
entertainment
2015 2016
Taget vertical Deal count Deal value (US$ Deal count Deal value (US$
million) million)
Aerospace and defense 6 280 5 325
Agriculture 12 598 11 700
Automotives 28 557 27 76
Cement and building products 14 1,154 17 5,239
Chemicals 27 255 30 420
Diversified industrial products 80 728 56 806
Education 17 31 18 12
Financial services 75 2,687 91 7,297
Healthcare 30 482 32 1,177
Infrastructure 93 2,273 92 4,041
Investment companies 9 200 4 42
Media and entertainment 56 1,226 56 1,801
Metals and mining 25 721 26 2,166
Oil and gas 9 2,175 18 19,615
Paper and forest products 4 512 7 66
Pharmaceuticals 53 3,116 51 4,557
Professional services 53 196 62 261
Real estate 45 723 29 785
Retail and consumer products 97 2,415 80 635
Technology 115 1,398 106 2,083
Telecommunications 16 7,895 19 2,424
Textiles 6 37 15 117
Travel services 16 361 14 1,542
Miscellaneous – – 1 –
Transaction Annual is
based on EY’s analysis
of Thomson ONE’s M&A
data
• The data compiled is for the period 1 January 2016 to 31 • The deals extracted have been classified for analysis on the
December 2016. The report highlights announced deals following basis:
and indicates their status — either pending or completed.
• Industries based on EY’s sector classification.
Terminated deals have been excluded from it.
• Inbound, outbound and domestic based on the target/
• Data was obtained from Thomson ONE through an “M&A”
acquirer countries.
customized search, where India was either a target or seller
or an acquirer. • Deal size brackets based on announced deal values.
• Deal values have been taken as indicated in Thomson ONE • The numbers have been rounded off where otherwise
(accessed February 2017). All the amounts are in US dollars indicated.
(unless otherwise stated). The conversion rate of non-US
• Total disclosed value of the deals does not include the
dollar deals is in accordance with Thomson ONE guidelines;
acquired debt of the targets.
foreign exchange rates are in accordance with deal
announcement dates.
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