Mumbai: Mergers and acquisitions (M&A) started on a strong footing, hitting a four-year high of $30.3 billion in the first quarter of 2022, where the global trend declined sharply, a report said.
Deal activity in value terms grew 5.6 percent in January-March 2022 compared to the first quarter of 2021, making it the highest first quarter period since 2018 when it stood at $31.1 billion.
Volume-wise, M&A activity grew 29.6 percent in the first quarter of 2022, making it the best quarterly number ever, according to M&A numbers aggregated by Refinitiv, an LSEG business that specializes in financial markets. One of the world’s largest providers of data and infrastructure.
M&S involving domestic companies stood at $23.7 billion, down 8.3 per cent year-on-year. Domestic M&S declined 24.5 per cent to $12.1 billion and inbound M&A increased 17.9 per cent to $11.6 billion, the highest in the first quarter since 2017.
The US was the most active overseas acquirer with deals valued at $8.2 billion, up 39 percent from a year ago and 70 percent of the market share in inbound M&A.
Outbound deals more than doubled to $5 billion, the most for the first quarter since 2010. Again, the US was the most targeted country in terms of value of domestic companies, with 21 deals worth $3.9 billion and a 77 percent market share. ,
Biocon’s acquisition of US-based Viatris Inc’s biosimilar business for $3.335 billion is the biggest deal so far this year and the largest Indian outbound acquisition ever in US healthcare.
Most of the deals targeted the high technology sector by value and number of deals, which totaled $6.6 billion, double the amount from a year ago and captured 21.8 percent market share.
Healthcare captured 15.5 percent market share and quadrupled in value to $4.7 billion, followed by the financial sector with a 13.5 percent market share at $4.1 billion, down 41.3 percent.
Alain Tan, a senior analyst at Refinitiv, said while global deal-making has fallen to its lowest level since 2020, Indian M&As had a strong start in the first quarter period to reach a four-year high.
Acquisitions in technology and healthcare, availability of private equity and abundant cash reserves and historically low interest rates were key factors driving M&A growth so far this year.
Private equity deals also started at a record pace and with an amount of $9.8 billion, the high technology sectors captured 28.7 percent market share.
But equity capital market (ECM) activity declined by 64.3 per cent, making it the lowest start in a year since 2019, as the number of ECM offerings declined by 23.3 per cent. In line with the global trend, domestic IPO activity also declined by 57.1 per cent and the number of IPOs declined by 14.8 per cent year-on-year.
Investment banking fees fell 33.5 percent to $179.7 million in the first quarter, the lowest first quarter period since 2016 in poor ECM shows. ECM underwriting fees fell 43.2 percent to $40.9 million, while DCM (debt capital markets) underwriting fees fell 23.9 percent to $49.1 million, the slowest start to a year since 2016.
Full M&A advisory fees fell 17.9 percent to $62.2 million and syndicated lending fees fell 52.5 percent to $27.4 million.
India’s equity capital markets (ECM) raised $3.1 billion in the first quarter, down 64.3 per cent, the slowest start to a year since 2019, as the number of ECM offerings declined by 23.3 per cent.
Follow-on offerings, which accounted for 67 percent of total ECM revenue, increased $2.1 billion, 64.9 percent in value and 25.8 percent in volume.
IPOs saw a slow start and raised $1 billion in Q1, down 57.1 percent, and the lowest first quarter since 2019, while the number of IPOs declined by 14.8 percent. Adani Wilmar’s IPO was the biggest ever this year, raising Rs 3,610 crore in January.
The $18.3 billion primary bond offering was down 25.7 percent, the lowest since 2016 when it stood at $9.9 billion. Reliance Industries launched a $4 billion bond offer, the largest ever US-dollar bond issue by the country.