Deal street jumps 14.5% in H1 to $43.5 bn on Jio stake sales

Mumbai, Jul 16 () Despite the massive disruptions due to the pandemic, deal street was vibrant in the first half of 2020 with M&A value rising 14.5 per cent to USD 43.54 billion, thanks to Reliance contributing nearly half of the deal value, according to a report.

However, as per the data collated by Mergermarket, the deal count dipped 24.7 per cent to 183 transactions during the period under review.

Between late April and June, Reliance Industries sold nearly 25 per cent in its telecom arm Jio Platforms to 10 investors, including Facebook, which snapped up 9.99 per cent for over Rs 43,000 crore. Together, Reliance raised around Rs 1.2 lakh crore, including through the largest QIP sale for over Rs 53,100 crore.

Beginning April 22, Reliance sold 24.71 per cent stake in Jio to Facebook, Silver Lake Partners, General Atlantic, KKR and other investors scooping up USD 15.27 billion. The selling spree continued into July with the latest being Google picking up 7.7 per cent for over Rs 33,700 crore on Wednesday.

"H1 M&As increased 14.55 per cent to USD 43.54 billion in value despite the pandemic, largely thanks to a series of stake sale by Jio Platforms to 10 investors since April, despite a 24.69 per cent year-on-year drop in volume to 183 transactions from 243 deals in H1 of 2019 generating USD 38 billion," Mergermarket said.

Though the in-bound deals came down 28.8 per cent to 89, the deal value increased to USD 26.9 billion compared to USD 21.38 billion from 125 deals in H1 of 2019. This was in spite of the deal value plunging from USD 20.22 billion to USD 6.68 billion, while in volume the same dipped to 42 from 47 deals.

According to the data, the first half deal value of USD 26.9 billion through 89 transactions represents 71.66 per cent of the USD 37.53 billion from 242 deals reported in FY19.

The out-bound deals dipped 37.6 per cent to USD 881 million across 21 deals from USD 1.42 billion from 34 transactions in H1 of 2019. This makes the first half to be the worst in terms of outbound deal value and deal count since the first half of 2014 at USD 650 million from 33 deals.

Domestic M&As generated USD 16.64 billion, on par with the last year levels, but the deal count shrank 20.3 per cent to 94.

The largest domestic deals were the acquisition of Aircel by a group of investors including UVARC for USD 2.6 billion and the 75 per cent stake sale in Krishnapatnam Port Company to Adani Ports & Special Economic Zone for USD 1.63 billion.

Other high-profile deals included divestment of NTPC's hydroelectric power unit THDC for USD 1.5 billion and power utility Neepco for USD 1.44 billion.

Private equity buyouts jumped by 48 per cent to USD 9.07 billion across 53 deals from USD 6.1 billion across 66 deals. The telecom sector accounted for almost 67 per cent of total such deals in value worth USD 6.1 billion across seven deals.

Mergermarkets expects deal-making volume to further fall as the economy remains crippled and the uncertainties over the potential re-emergence of the pandemic.

Infrastructure, renewables and pharma and healthcare may attract investments in the second half as deals that are at advance stage could get closed.

JB Chemicals sold its majority stake to KKR for USD 617 million earlier this month and a few other deals in the pharma segment include Adar Poonawala's Serum Institute looking to raise up to USD 1 billion for its pandemic division to develop vaccines.

In the renewables sector, Sembcorp Energy, IL&FS and Mytrah Energy are in active discussions planning to sell stakes to PEs. BEN BAL BAL