'August sees big surge in M&A deals; Jan-Aug tally at $22 bn'

New Delhi: Corporate India announced merger and acquisition (M&A) deals worth USD 2.5 billion in August, up 3-fold year-on-year, driven largely by positive macro- economic factors and government's reforms initiatives, says a report.

The surge in deal value was largely on account of big ticket deals, said the Grant Thornton report.

Banking and financial sector led the deal activity contributing over 30 percent of total deal value driven by the USD 777 million HDFC Life's merger with Max Life creating India's largest private sector life insurance company with market value of USD 10 billion.

Among others, telecom, agriculture and forestry, pharma and manufacturing witnessed big ticket deals values over USD 100 million each.

There were over 300 M&A transactions contributing around USD 22 billion in value from January-August, spread evenly spread across cross-border and domestic M&As.

"What is driving this growth is obviously the optimism in the country coupled with the fact that the macro-economic factors such as inflation, GDP growth, FDI, seem positive," Grant Thornton India LLP Partner Prashant Mehra said.

Further, the government's thrust on ease of doing business and a reform based approach around banking, infrastructure and more importantly GST are all factors which have further influenced investment and growth, Mehra added.

"Most of the activity in M&A seems to be around core sectors such as BFSI, Telecom, Agri, Pharma and Manufacturing which together contributed around 90 percent of the total deal value under M&A in August," Mehra said.

Mehra expects a further rise in deal activity driven by the need for consolidation primarily in the infrastructure and manufacturing sectors.

"The rise in rural demand as well as the spur in consumption spending that can be expected from the 7th Central Pay Commission's award will together bolster and drive economic growth and thus, the deals," Mehra said.