Report finds 600-700 Indian companies being acquired annually

The CII-PwC report cites more than 6,000 M&A transactions between the financial years 2009-10 and 2017-18, of which 900 have been done by the current BSE 500 companies.

Of these, inbound M&A accounted for 25, 23 and 29 per cent of the overall foreign direct investments into the country. 

M&A in 2017-18 alone accounted for 6 per cent of the aggregate gross capital formation while the value of M&A deals in the first quarter of the current fiscal grew nearly 10 fold compared to the same period last year. This is against a GDP growth rate of 7.3 per cent over last year.

As many as 600-750 Indian companies have been acquired annually over the last decade with an average transaction size of Rs200 crore, says the report.

India has seen M&A activity in excess of $123.7 billion, $182.6 billion and $348.3 billion over the last three, five and ten years, respectively, representing an annualised growth of 13.2, 13.7 and 4 per cent, respectively, during these periods, the CII-PwC study notes.

According to the CII-PwC report ‘Value Creation: Laying the Foundation for Mergers and Acquisitions’, more than 3,400 Indian companies, both in public and private sectors, have been active in M&A over the 2010-2018 period.

“Of the more than 6,000 M&A transactions (cumulative, FY10-18), 900 have been done by the current BSE 500 companies. While transactions by BSE 500 companies account for only 15 per cent of total M&A volume, they comprise more than 52 per cent by value,” says the report.

This indicates that larger companies have been acquiring larger targets (3-5x the average deal size) compared to the overall group, it says, adding, “What is also interesting to note is that M&A trends (number and average value of transactions) have been similar for BSE 500 as well as other companies, indicating a close linkage of M&A with macro-economic and sector trends.”