The deal street has come out of the record lows in the pandemic-washed out June quarter with transaction value growing almost 6 per cent to $21.64 billion in the July-September 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 per cent y-o-y to $21.64 billion across 76 deals, while in terms of volume this is down a full 33 per cent from 114 transactions valued at $20.44 billion in the year-ago period, as the pandemic continues to negatively impact the economy.
Domestic deals jumped 130 per cent in terms of deal value to $9.46 billion across 37 deals in the third quarter compared to $4.12 billion across 28 deals in the second quarter.
On yearly basis, such deals were down 10.3 per cent from $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 $3.38 billion, and Motherson Sumi's $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 per cent to $68.15 billion across 269 transactions, even though the deal count slipped 24.22 per cent over the same period last year.
Of the total value, as much as a third or $22.3 billion came through Reliance between late April and September when it sold around 25 per cent in the telecom arm Jio Platforms and around 10 per cent in Reliance Retail during the third quarter.
Of the total, inbound deal value in the three quarters increased by 27.7 per cent to $39.9 billion compared to $31.3 billion during the same period in 2019.
However, inbound deals slowed down in September quarter to $12.18 billion across 39 deals compared to June quarter at $20.3 billion across 48 transactions, recording a 41 per cent quarter-on-quarter drop in value.
While inbound Chinese investments at $385 million across three deals plunged 63 per cent in deal counts compared to the same period in 2019 when it stood $1.8 billion across eight deals in the first nine months of 2020, inflows from the US soared 300 per cent to $24.98 billion across 61 deals over the same period in 2019 when it was a paltry $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 per cent to $486 million across 14 deals in the September quarter from $234 million across 10 deals in September quarter of 2019 and jumped fivefold from Q2 when it was $105 million across seven deals.
PE buyouts recorded $5.6 billion across 27 deals in the third quarter, down 43.85 per cent in terms of deal value, and 17 fewer deals than in the third quarter of 2019.
The telecom sector had eight deals with $6.36 billion during the first three quarters compared to zero transactions in the same period a year before.
Consumer and pharma sectors surged to $2.5 billion and $1.56 billion respectively, growing more than 100 per cent in value from the year-ago period.
PE exits plunged a full 84 per cent in the third quarter to $613 million across seven deals.
Transportation and construction were the most active sectors representing 75.9 per cent of the total PE exits during the period, while pharma and financial services recorded the lowest deal value.