Dealtracker. DealTracker. Providing M&A and Private Equity Deal Insight. Third Quarter, 2014 Volume 10.9

Transcription

1 Dealtracker Providing M&A and Private Equity Deal Insight DealTracker Third Quarter, 2014 Volume 10.9

2 About Grant Thornton More than 38,500 people Total global revenues $4.5bn (2013) Ranked among top 5 in all major markets including India Member firm within Grant Thornton International 2,000 people based in over 130 countries and over 700 offices 11 cities one of the largest fully integrated Assurance, Tax & Advisory firms in India Presence in 11 major cities of India Ahmedabad, Delhi, Bengaluru, Chandigarh, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai, Noida and Pune

3 Foreword Raja Lahiri Partner Grant Thornton India LLP We are pleased to present Grant Thornton Dealtracker Report for 3 rd Quarter of 2014 (July September, 2014) which captures deal data (value/volumes) along with related analysis. There has been clear upswing in the M&A and PE deal activity with US$36bn worth of deals in the nine month period ending September 2014, the best we have seen since It is noteworthy to mention here that we have seen an increase across segments from domestic, inbound, outbound to Private Equity in both values and volumes. This clearly implies a revival in business sentiments and investment climate. While the year began on a rather cautionary note, the deal pace started picking up in the months closer to the Elections and the momentum kept increasing thereafter, signalling positive vibes for the months and quarters to come. Clear deal drivers have been the domestic and inbound space with 70% higher inbound values and more than twice the domestic deal values seen in Moreover, with close to a 40% increase in investment volumes over 2013, private equity deals have contributed 50% of total deal volumes in 2014 driven by the technology sector. In terms of sectors, we have seen M&A values driven by the Pharma sector with deals such as Sun- Ranbaxy merger indicating the consolidation trend in the sector, and GlaxoSmithKline consolidating operations by hiking the stake in Indian subsidiary. Technology sector has been active both in M&A and PE. Key deals include Cognizant acquiring US based Trizetto for US$2.7 bn, Flipkart-Myntra acquisition for US $ 340mn. PE investment continues to be driven by the e-commerce sector led by the billion dollar investment into Flipkart. Sectors which are expected to see renewed deal activity include infrastructure, energy, consumer and financial services. We expect valuations to go up given the renewed business sentiments which in our view, would be both a challenge and an opportunity for dealmakers to close deals in the coming quarters. We believe that this momentum of deal activity will continue to increase and we look forward to closing the year on a high note. Happy Dealmaking! 3

4 Dealscape YTD 2014 Highlights Quarter 3, 2014 Deal Round-up Deals of the Quarter 4

5 Deal Round Up YTD 2014 Deal Summary- YTD Volume Value (USD mn) Domestic ,431 4,319 9,717 Crossborder ,124 13,385 14,787 Merger & Internal Restructuring ,614 4,264 3,313 Total M&A ,168 21,969 27,817 Private Equity ,052 7,806 8,454 Grand Total ,220 29,775 36,271 Cross border includes In YTD 2014, the overall deal activity stood at USD 36.2bn (886 deals), significantly higher than the USD 29.7bn (694 deals) in 2013 and also surpassing 2012 levels. PE investment so far in 2014 is higher at USD 8.4bn against USD 7.8bn in 2013, with 38% higher volumes in 2014 compared to The M&A space has rebound in YTD 2014 as compared to the previous year, with 70% higher inbound values and more than twice the domestic deal values seen in Inbound Outbound ,669 5,685 9, ,455 7,700 5,089 Trend spotting Total Deal Value Spread (USD bn) YTD'14 Total Deal Volume Spread YTD'14 There is a continuous uptick in PE deal values and volumes, with over 50% deal volume from PE/VC investments alone. M&A has rebound in 2014 driven by domestic and inbound deals both in values and volumes Private Equity Merger & Internal Restructuring Outbound Inbound Domestic

6 Deal Round Up YTD 2014 YTD 2014 Mergers & Acquisitions Media & Entertainment 4% Manufacturing 5% Real Estate 6% Energy & Natural Resources 9% Others 14% Telecom 12% Pharma, Healthcare & Biotech 19% Retail & Consumer 13% IT & ITES 18% Deal Volume Deal Value (USD mn) Sectors YTD 2012 YTD 2013 YTD 2014 YTD 2012 YTD 2013 YTD 2014 Pharma, Healthcare & Biotech IT & ITES Retail & Consumer Telecom Energy & Natural Resources Real Estate Top Sectors based on Deal Value Private Equity Deal Volume Deal Value (USD mn) Sectors YTD 2012 YTD 2013 YTD 2014 YTD 2012 YTD 2013 YTD 2014 IT & ITES Infrastructure Management Banking & Financial Services Real Estate Pharma, Healthcare & Biotech Retail & Consumer Transport & Logistics 2% Manufacturing 3% Energy & Natural Resources 4% Retail & Consumer 6% Pharma, Healthcare & Biotech 8% Media & Entertainment 2% Real Estate 8% others 8% Banking & Financial Services 10% Top Sectors based on Deal Value Infrastructure Management 13% IT & ITES 36% 6

7 Deal Round Up Q Deal Summary Q3 Volume Value (USD mn) Domestic ,288 1,309 2,095 Crossborder ,011 4,922 8,393 Merger & Internal Restructuring , Total M&A Private Equity Grand Total Cross border includes ,373 9,996 10, ,254 2,126 3, ,628 12,121 13,665 Q has been the best quarter in the last 3 years with an increase in volumes and values across domestic, cross-border and PE. Inbound activity in Q3'14 saw 8 deals valued at over a USD 100mn each, led by the USD1.9bn stake purchase of Diageo in United Spirits Private equity witnessed a 47% increase in values led by the billion dollar investment in Flipkart and 37% increase in volumes driven by the IT&ITES sector with over 40% share in total deal volumes. Inbound Outbound ,590 4, ,315 3,331 3,523 Trend spotting Total Deal Value Spread (USD mn) Q3'14 Total Deal Volume Spread Q3'14 PE: Several big ticket deals in Q3' investments over USD 50 mn each including two over USD 100mn and one billion dollar investment. Q3'2013 had only 9 investments worth over USD 3,471 2,254 2, mn each ,765 3, M&A activity saw increase across all ,331 segments, with inbound driving values ,315 4,870 and domestic driving volumes 1, , , , Private Equity Merger & Internal Restructuring Outbound Inbound Domestic

8 Sector Round-up Q Banking & Financial Services 2% Pharma, Healthcare & Biotech 6% Manufacturing 8% Telecom 10% Media & Entertainment 2% Energy & Natural Resources 10% M&A Q By Value Others 7% Retail & Consumer 19% IT & ITES 36% Pharma, Healthcare & Biotech 4% Banking & Financial Services 5% Retail & Consumer 6% Energy & Natural Resources 7% Real Estate 9% Infrastructure Management 9% PE Q By Value Media & Others Entertainment 6% 3% IT & ITES 51% M&A Q By Volume PE Q By volume Retail & Consumer 5% Banking & Financial Services 5% Infrastructure Management 5% Others 19% Energy & Natural Resources Media & 6% Entertainment 9% IT & ITES 26% Manufacturing 13% Pharma, Healthcare & Biotech 12% Media & Entertainment 4% Education 4% Energy & Natural Resources 5% Others 16% Banking & Financial Services 6% Retail & Consumer 6% Real Estate 6% IT & ITES 42% Pharma, Healthcare & Biotech 11% 8

9 Deals of the Quarter M&A Cognizant Technology Solutions acquired US based TriZetto Corp from PE firm Apax Partners LLP and other minority shareholders. US$ 2.7 bn PE Flipkart raised USD 1bn in a fresh round of funding, led by existing investors along with other new investors US$ 1 bn ACQUIRER TARGET RATIONALE Cognizant is a leading provider of information technology, consulting, and business process outsourcing services. TriZetto Corporation is a US based healthcare IT and software solutions provider that helps payers and providers work more efficiently and collaborate to deliver better healthcare services This is a strategic acquisition for Cognizant as it gives the company the ability to work better with its healthcare clients. It's the biggest acquisition in the Indian IT space Existing investors Tiger Global, Naspers, DST Global, ICONIQ, Accel Partners & Sofina. New investors - Singapore based sovereign wealth fund GIC & Morgan Stanley Investment Management. Flipkart is India s largest e-commerce company. This is its second fundraise in the current year, taking its total funds raised to over USD 1.7 bn since inception. With the third largest PE fundraise of all time in India, Flipkart plans to strengthen its technology and acquire firms across areas like e-commerce, technology and supply chain and exploit the massive market opportunity in the e-commerce sector. INVESTOR INVESTEE COMMENTS 9

10 M&A Round-up Q Top M&A Deals of the Quarter Acquirer Target Sector US $ Mn Deal Type % Stake Cognizant Technology Solutions TriZetto Corp IT & ITES 2,700 Acquisition 100% Diageo Plc United Spirits Ltd Retail & Consumer 1,903 Increasing Stake to 54.78% 26% Teleperformance Aegis Limited USA Inc - Aegis Group IT & ITES 610 Acquisition 100% Huhtamaki Oyj Positive Packaging Industries Limited Manufacturing 336 Acquisition 100% Adani Power Ltd Lanco Infratech 1,200 MW plant Energy & Natural Resources 333 Acquisition 100% TCG Group Haldia Petrochemical Limited Energy & Natural Resources 220 Strategic Stake 40% Solargise Grapp Energies & subsidiary Green Ripples Energy & Natural Resources 200 Majority Stake N.A. Strides Arcolab Shasun Pharma Pharma, Healthcare & Biotech 200 Merger N.A. Wipro Ltd ATCO- IT Services division IT & ITES 195 Acquisition 100% JSW Steel Limited Welspun Maxsteel Limited Manufacturing 164 Acquisition 100% 10

11 PE Round-up Q Top PE Deals of the Quarter Investor Investee Sector US$ Mn % Stake Morgan Stanley Investment Management, GIC, Accel Partners, DST Global, Iconiq Capital and Sofina Flipkart Online Services Pvt Ltd IT & ITES 1,000 N.A. KKR (through structured financing) GMR Holdings Pvt. Ltd Infrastructure Management 164 N.A. Goldman Sachs, Asian Development Bank and South Asia Clean Energy Fund ReNew Power Private Limited Energy & Natural Resources 140 N.A. Apax Partners Cholamandalam Investment & Finance Company Limited Banking & Financial Services 83 8% Standard Chartered Private Equity Advisory (India) Private Limited Sterlite Power Grid Ventures Limited Infrastructure Management 83 N.A. Tata Capital Shriram Properties Private Limited Real Estate 80 18% Peninsula Brookfield Investment Managers Ansal Properties and Infrastructure Limited Real Estate 66 N.A. Tiger Global and Bharti Softbank Holdings Pte. Ltd. Hike Technologies Private Limited IT & ITES 65 N.A. Xander Group Supertech acre township project Real Estate 65 N.A. IFC Idea Cellular Limited Telecom 65 1% 11

12 Our Corporate Finance practice comprises 100 senior specialists with over 400 years of team experience and providing end-to-end solutions. Vishesh Chandiok Harish HV Mahad N Sridhar V Siddhartha Nigam Dhanraj Bhagat Prashant Mehra Raja Lahiri Darshana Kadakia David Panna Ashish Chhawchharia Sumeet Abrol Manish Saxena Vibhor Sharma Vrinda Mathur Vikarth Kumar Abhay Anand Pankaj Chopda Shanthi Vijetha Anirudh Gupta 12

13 This document captures the list of deals announced based on information available in the public domain and based on public announcements. Grant Thornton India LLP does not take any responsibility for the information, any errors or any decision by the reader based on this information. This document should not be relied upon as a substitute for detailed advise and hence, we do not accept responsibility for any loss as a result of relying on the material contained herein. Further, our analysis of the deal values are based on publicly available information and based on appropriate assumptions (wherever necessary). Hence, if different assumptions were to be applied, the outcomes and results would be different.

14 About Grant Thornton Grant Thornton India LLP is a member firm within Grant Thornton International Ltd. The firm is one of the oldest and most prestigious accountancy firms in the country. Today, it has grown to be one of the largest accountancy and advisory firms in India with nearly 1,200 professional staff in New Delhi, Bangalore, Chandigarh, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai and Pune, and affiliate arrangements in most of the major towns and cities across the country. Service Areas The firm s core service areas are as follows Assurance - Audit - FRAS Taxation - Compliance & Outsourcing - Direct tax - Indirect tax - Transfer Pricing - US Tax Our Corporate Finance Services (CFS) practice leverages on our understanding of corporate strategy, capital markets, and international jurisdictions and regulatory requirements, to help unlock the potential for growth in dynamic businesses. We operate in a matrix structure with a sector focus and service focus to increase our ability to service clients. Our pool of highly experienced and qualified personnel possesses the requisite expertise to assist businesses in their varied transactions requirements pertaining to acquiring, divesting, listing, or raising capital. Our CFS practice offers the following services: Lead advisory Transaction advisory Valuation To know more visit us on corporate-finance-services/ Advisory Business Risk Corporate Social Responsibility Corporate finance Forensic & Investigations Government & Infrastructure Healthcare &Life Sciences Leadership Consulting Please write to us at contact@in.gt.com if you would like to receive the list of deals. We would be delighted to receive your feedback! contact@in.gt.com Dealtracker Editorial team: Sowmya Ravikumar, Ankita Arora 14