FOREWORD
We are pleased to present the second annual edition of SKP Investment Chronicle – our update that focuses on the deal-making landscape in India, comprising of mergers and acquisitions (M&A), equity investments and exits.
India has become one of the top merger and acquisition markets in Asia, being backed by steady and active investor sentiments this year. 2016 was marked by a significant number of high value deals, wherein the value of the top 100 deals contributed to approximately 85% of the total deal value. Asset acquisition, domestic consolidation and synergies of combination were the major drivers behind the leading transactions of the year.
Contributing approximately 75% of the total deal landscape value, M&As conquered the deal chart this year. With multiple big ticket transactions, including the biggest deal of the last five years, the total deal value for both domestic and inbound deals surged.
Growing investor concerns on aggressive valuations and profitability of businesses were evident this year as equity investments dropped by 40% to USD 13.36 billion. In contrast, Private Equity Exits were at their highest since 2012, with M&As emerging as the most favoured exit route.
While private equity investments may still remain subdued in 2017, the presence of a wide range of start-ups as well as increasing competition in matured sectors are expected to give way to further mergers and consolidations.
Numerous regulatory reforms and positive macroeconomic factors have kept the deal momentum high in India. Government initiatives such as the abolition of the Foreign Investment Promotion Board, the expected implementation of Goods and Services Tax (GST) and Bankruptcy Code are expected to simplify doing business in India. Furthermore, increasing clarity on taxation and structural developments have also encouraged inbound investments. However, the execution of these reforms and policies still remains a challenge and will be a crucial factor in the development of the business, tax and regulatory environment of India.
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