The deal street has come out of the record lows in the pandemic-washed out June quarter with transaction value growing almost 6 percent to US$ 21.64 billion in the third quarter, thanks to a string of equity sales by Reliance in its telecom and retail arms, says a report.
According to the data collated by Mergermarket, the deal value in the quarter ending September rose 5.9 percent y-o-y to US$ 21.64 billion across 76 deals, while in terms of volume this is down a full 33 percent from 114 transactions valued at US$ 20.44 billion in the year-ago period, as the pandemic continues to negatively impact the economy.
Domestic deals jumped 130 percent in terms of deal value to US$ 9.46 billion across 37 deals in the third quarter compared to US$ 4.12 billion across 28 deals in the second quarter. On yearly basis, such deals were down 10.3 per cent from US$ 10.55 billion across 49 deals.
Largest domestic transactions in the September quarter were the acquisition of Future Group’s retail & wholesale businesses along with logistics & warehousing businesses by Reliance Retail Ventures for US$ 3.38 billion, and Motherson Sumi’s US$ 3 billion acquisition of Samvardhana Motherson International in a reverse takeover transaction.
For the first nine months of 2020, M&A activity rose 17.2 percent to US$ 68.15 billion across 269 transactions, even though the deal count slipped 24.22 percent over the same period last year.
Of the total value, as much as a third or US$ 22.3 billion came through Reliance between late April and September when it sold around 25 percent in the telecom arm Jio Platforms and around 10 percent in Reliance Retail during the third quarter.
Of the total, inbound deal value in the three quarters increased by 27.7 percent to $39.9 billion compared to US$ 31.3 billion during the same period in 2019.
However, inbound deals slowed down in September quarter to US$ 12.18 billion across 39 deals compared to June quarter at US$ 20.3 billion across 48 transactions, recording a 41 percent quarter-on-quarter drop in value.
While inbound Chinese investments at US$ 385 million across three deals plunged 63 percent in deal counts compared to the same period in 2019 when it stood US$ 1.8 billion across eight deals in the first nine months of 2020, inflows from the US soared 300 percent to US$ 24.98 billion across 61 deals over the same period in 2019 when it was a paltry US$ 6.2 billion across 80 deals.
Investments into Reliance arms are the sole reason for this massive spike, as most of the inflows into Jio and Reliance Retail are from the US-based entities, the agency said.
Outbound deals rose 108 percent to US$ 486 million across 14 deals in the September quarter from US$ 234 million across 10 deals in September quarter of 2019 and jumped fivefold from Q2 when it was US$ 105 million across seven deals.
PE buyouts recorded US$ 5.6 billion across 27 deals in the third quarter, down 43.85 percent in terms of deal value, and 17 fewer deals than in the third quarter of 2019.
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