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Mergers and Acquisitions fall sharply, but PE activity grows

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2007 will go down in history as the year of Mergers & Acquisitions in India. However, 2008 has not kept pace with the momentum gained last year.

This year has not been good for India overall, Stock Market today has come down to nearly 12,500 points – a 15 month low -, investors have lost thousands of crores of rupees, the rupee has lost the fight handsomely against the dollar – last 6 months have seen rupee plummet from high of nearly 38.5 to a low of 42.75 against the dollar, real estate which grew at astonishing pace last year has seen tremendous slowdown. Inflation, which was hovering at less than 4% last year has nearly tripled to 11.5%.

The total number of Merger & Acquisition deals too have seen huge negative growth. During the first six months of 2008 total M&A deals stand at 265 with value at $18.54 billion as against 335 deals amounting to $ 43.97 billion in the corresponding period in 2007.

Even though the M&A scene is grim, surprisingly, the PE (Private Equity) funding has shown growth, which really is a good sign. Uncertainty prevailing in the Indian market did not seem to have impacted sentiment of private equity players.

The number of PE deals during the first six months of 2008 was 194 worth $7.54 billion, as against 195 deals amounting to $6.77 billion during the corresponding period in 2007.

First 6 months have been really bad, lets see how coming 6 months of this year pan out.

  1. Aqeelzam says

    Agreed with Mr. Arun
    Well its a good article on this topic.

  2. saf says

    can u pls post me articles relating to mergers with context to indian companies as my phd area is mergers
    thank u

  3. Arun says

    :) Sridhar, actually we are both saying the same and are right…the only difference is when I say appreciating or stronger rupee means it is at 39 and weaker rupee means it is at 44. (Even though 39 is less than 44, it called stronger rupee:)..

    In your first comment you said falling INR (which actually means it is going from 39 to 44)

  4. Arun says

    No Sridhar, it is the other way round…If the rupee gains, the foreighn companies come cheap right…as Indian companies make their money in Rupee and strong rupee means they have more "value" and other currencies being weak, companies are cheaper…

  5. Sridhar Oruganti says

    Ah ok.
    I realize sometimes jargon too is important
    thanks Arun. 

  6. Sridhar Oruganti says

    A co worth 100$ can be bought with 1.Rs 3900 when 1$=39 inr
    2.Rs 4400 when 1$=44 inr
    am i wrong somewhere???
    —Sri

  7. Sridhar Oruganti says

    Doesnt falling inr actually aid indian cos trying to buyout foreign cos?

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