Grant Thornton India sees dip in MA activities

Written By Unknown on Rabu, 10 Oktober 2012 | 21.03

The third quarter of the year has turned out to be a weak quarter as far as the number and size of M&A deals are concerned. The number of deals has slipped from the corresponding quarters in the last two years, and the size of deals has also weakened. Raja Lahiri of Grant Thornton India shares his view on the findings of the deal tracker report.

Below is the edited transcript of his interview to CNBC-TV18.

Q: What is the reason for the downtrend that we are seeing in M&As?

A: In the third quarter, we saw 34% drop in M&A activity and 24% drop in the value of number of deals. The impact of weak economic growth, tax regulation and pending reforms is clearly seen. The key impact has been seen on inbound transactions where it slipped significantly, which in turn impacted outbound transactions and the overall M&A activity. We have seen a value growth of private equity transactions largely because of some larger billion-dollar transactions in the IT space in this quarter.

Q: Which sector caught your attention? What was the buzz in this quarter?

A: This quarter was dominated by the IT-ITeS sector where there was a transaction of USD 1 billion in Genpact by Bain Capital. In the second transaction, Infosys bought Lodestone, a European company for USD 349 million. In the oil and gas space, ONGC bought stake outside India for USD 1 billion.

Q: The government has been very proactive in this quarter with reforms and announcements. Do you expect Deal Street, investment sentiments to improve going ahead?

A: After a long time we are seeing some sentiment coming back like FDI announcement in retail, pension, insurance, broadcasting, GAAR announcement and the Shome Committee Panel Report and it is very positive. I think the sentiment is coming back. But it will take some more quarters to see some large deals happening.



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