Transactions Quarterly

Transcription

1 Edition 19 Edition July-September October-December 213 Transactions Quarterly A eeae perspective on the Indian transactions market

2 In this edition Indian transaction activity: M&A landscape witnesses an uptick in deal activity 4 Transaction analysis: Sector analysis 5 Cross-border M&A 9 Indian M&A snapshot 1 Global transaction activity: Global M&A records above-average performance in 4Q13 12 Indian economy: India economy promises a turnaround 14 Transactions quarterly 3Q14 Outlook: Policy reforms and quest for growth bodes well for deal activity 15 2

3 Foreword Welcome to the 19th edition of Transactions Quarterly, our quarterly review of India s M&A landscape. The world economy reflected mixed trends, both in developed and emerging economies, owing to moderate growth. While the US, the UK and Japan stood out amongst the developed markets, Eurozone s still fragile economic recovery was impacted. The emerging economies remained subdued, with the exception of China and India. Although China s economy did hit a soft spot during the quarter, it avoided a hard landing, supported by the continued implementation of the Government s reform agenda. For India, the quarter was encouraging in terms of investor sentiments. The newly-elected Government took a strong position and introduced policy reforms addressing multiple issues, including a focus on boosting economic growth, FDI and infrastructure spending besides streamlining tax procedures. The global M&A activity slowed down in 3Q14 as geo-political uncertainties forced deal makers to take a back seat in an otherwise exceptional year for M&A. Overall, 214 remains a blockbuster year, as consolidation efforts of major global players in the telecom, media and pharmaceuticals space led to a spate of mega deals, which helped push M&A value to the highs seen during pre-crisis levels. Global M&A is expected to be positive for remainder of the year owing to continued momentum on a broad range of sectors and solid fundamentals of major economies including the US and the UK. In India, M&A was the preferred route for companies to expand their operations. M&A activity is expected to gather traction over the next few months owing to rising investor confidence that is being fuelled by a relatively stable political scenario. M&A over the past quarter was driven by companies focus to de-leverage and restructure their operations and simultaneously infuse liquidity in the business. This trend is expected to continue, especially in the power and utilities sector. Amit Khandelwal Partner and National Director, Transaction Advisory Services, EY Transactions quarterly 3Q14 3

4 Chapter1 M&A landscape witnesses an uptick in deal activity, driven by improved investor confidence Exhibit 1: Quarterly transaction activity in India Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Value (US$ b) Count Source: ThomsonONE.com and EY analysis Note: Deals taken as per announced date. Includes mergers, acquisitions, divestments, spin-offs and JVs. Private equity (PE) deals are excluded. Transaction activity in 3Q14 Indian M&A activity registered an uptick during the quarter, driven by improved investor confidence owing to the Government s efforts to take Indian economy towards high growth. The total deal volume went up by 22% in the quarter, with the number of deals increasing to 23 from 167 in 3Q13, while deal value reached US$4.7 billion, declining 12% from US$5.4 billion. This decline is attributable to one mega deal of US$2.6 billion in 3Q13 by ONGC Videsh Ltd. of a 1% stake in Mozambique s Rovuma 1 offshore block. However, if this deal is excluded, the quarter registered an increase of 71% in deal value against 3Q13. Domestic activity continued to grab the largest share of the Indian M&A landscape, accounting for 61% of total deal volume and 51% of total deal value. The infrastructure group dominated the M&A table, accounting for 34 deals worth US$1.6 billion. In infrastructure, the power generation sector contributed the most to the aggregate disclosed deal value, primarily due to the largest deal of the quarter. The deal featured Lanco Infratech Ltd. selling its Udyapi thermal power plant to Adani Power Ltd. for US$982 million. The technology sector followed infrastructure with 27 deals worth US$1 billion, reflecting a strong focus on services and solutions around healthcare IT. Top 1 Indian deals of the quarter Deal type Date Target Target nation Acquirer Acquirer nation Value (US$ m) Sector Deal status Domestic 13-Aug-14 Udupi Power Corp Ltd India Adani Power Ltd India Thermal power Completed Inbound 9-Jul-14 Essar Group s stake in US Teleperformance France 61. Technology Completed Aegis USA Inc.* SA Inbound 8-Jul-14 Positive Packaging India Huhtamaki Oyj Finland Diversified Announced Industries Ltd industrial products Inbound 14-Aug-14 GRAPP Energies Pvt. Ltd India Solargise Ltd United 2.2 Cleantech Completed Kingdom Domestic 29-Sep-14 Shasun Pharmaceuticals India Strides Arcolab India Pharmaceuticals Announced Ltd Ltd Outbound 17-Jul-14 Atco I-Tek Inc Canada Wipro Ltd India Technology Announced Transactions quarterly 3Q14 Domestic 18-Aug-14 Welspun Maxsteel Ltd India JSW Steel Ltd India Metals and Completed mining Domestic 5-Jul-14 Express Towers India Investor Group India Real estate Completed Domestic 17-Sep-14 BPTP Ltd -IT park India RMZ Corp India SEZ/IT parks Announced Inbound 22-Jul-14 Max Healthcare Institute Ltd India Life Healthcare Group Hldg South Africa Healthcare Announced Source: ThomsonONE.com and EY analysis Note: Figures have been rounded off to the nearest unit. Conversion rate as per ThomsonONE.com guidelines foreign exchange rate as on the deal announcement date. *Essar Group sold the US-based operations of its subsidiary Aegis Ltd. 4

5 Technology Outbound in technology imminent to enhance capabilities Overview: The sector topped the charts recording the highest deal volume (27 deals), worth US$1 billion during the quarter. Key deal(s): The highlight deal of this sector was Essar Group s divestment of Aegis USA Inc, the US-based operations of Aegis Ltd., to Teleperformance SA of France for US$61 million. Data analytics and software were in highlight: Data analytics and software emerged as attractive segments, accounting for above 75% of total technology targeted deals. Mid-size companies were active in acquiring relatively small players to build and develop their capabilities in segments, including mobile application, data analytics and business intelligence, and cloud platform. Key deals include Sonata Software s acquisition of XYKA Software and Rezopia Inc; Zensar Technologies acquisition of Professional Access. Players to head toward untapped US healthcare industry: The prevailing regulations pertaining to healthcare insurance industry in the US have provided a lucrative opportunity to IT players to improve their offerings and gain market share. Until now, Indian firms were not able to fully tap the potential emerging from these regulations, due to inadequate capabilities to serve the market segments including health exchanges, hospitals and medical devices manufacturers. However the recent US$2.7 billion acquisition of the USbased TriZetto by Cognizant will likely put pressure on players with cash-rich balance sheets and motivate them to focus on M&As and partnerships in the segment. Players, including Infosys, TCS and Wipro have cited their interest for buyouts in the healthcare and life sciences verticals. BPO industry to hunt for new markets in Latin America and Europe: These markets may see strong action from the Indian BPO players in the coming quarters as the US, the prime contributor of revenues (~ 6%) for the Indian BPO industry, is reaching its saturation level. Quest for market expansion and new capabilities will continue to be the thrust for inorganic growth. Over the last quarter, we have seen more acquisitions and investments being made in the healthcare IT space. These opportunities created by the US healthcare regulations highlight a need for enhancing systemic efficiencies. Healthcare IT is going to remain a focus area for investments for most of the IT companies in the coming months. Ashish Basil Partner - Technology Transaction Advisory Services Transactions quarterly 3Q14 5

6 Retail and consumer products E-tailers to see consolidation Transactions quarterly 3Q14 Overview: The sector clocked 17 deals, totalling US$112.3 million during the quarter, 13 being domestic in nature. Key deal(s): The largest deal of the sector was acquisition of an additional 2% stake by BIC SA of France in Cello Writing Inst & Cont Pvt Ltd, a manufacturer and wholesaler of pens, for US$72 million. E-tailers to see consolidation: Domestic e-tailers are increasingly indulging in acquisitions, with the objective of addressing the growing demand for online merchandise and counter the burgeoning competition. The hunger for balance between growth and profitability is pushing players to strengthen their core business along with diversifying their portfolio. Over the past few months, we have seen industry majors, including Flipkart strengthening their presence in the online fashion industry via inorganic route. The industry is further expected to see acquisitions in a broad range of segments, including grocery, furniture and jewellery, as the players strive to become one-stop shop and cater to the needs of new-age urban consumers. These players are also keen to develop the entire seller ecosystem, from supply chain to payment solutions. The industry is expected to see e-tailers acquiring these support services firms to minimize operational loop-holes and simultaneously maximize their margins. Several leading ecommerce websites such as Flipkart and ebay, have started setting up their own logistics units in different states to cater to the regional demand. As the demand mushrooms, they might also acquire small logistics firm to enhance their in-house capabilities. At the same time, Flipkart is also in talks to acquire ngpay, a mobile platform for ticketing, shopping and recharges and is likely to ink a deal soon to strengthen its payment processing mechanism. In conjunction, these players are also engaging in fundraising via private equity (PE) route to support their expansion plans. The sector has recently witnessed the largest ever PE funding by any Indian internet company Flipkart raised US$1 billion in July 214. While online and mobile share of consumer spending will continue to rise, the players across spectrum will need to connect with users through multiple channels simultaneously and hence omni-channel strategies will come into play. For retailers and brand owners, the future inorganic activity is likely to revolve around strengthening data and analytics driven capabilities and channel expansion Nitin Gupta Partner - Retail and Consumer Products, Transaction Advisory Services 6

7 Pharmaceuticals Expansion drives acquisitions in pharmaceuticals Overview: Overview: The sector recorded nine deals, with an aggregate disclosed value of US$257.6 million, eight were domestic in nature. Key deal(s): The largest deal in the sector was Strides Arcolab Ltd. s acquisition of Shasun Pharmaceuticals Ltd. for US$197.2 million. Desire for expansion to drive acquisitions: Indian pharmaceutical companies are likely to enter midsized deals aimed at acquiring manufacturing units and brands of local and overseas players in order to grow their business both in existing and new markets. The move will also help them gain economies of scale and withhold cost pressures under the prevailing price control policy. We have seen a number of such deals in recent times, including Strides Arcolab Ltd. s acquisition of Indian branded generics business of Bafna Pharmaceuticals Ltd., Cipla Ltd. s acquisition of two plants from Osaka Pharma Pvt. Ltd. and HLL Lifecare Ltd. s acquisition of majority stake in Goa Antibiotics and Pharmaceuticals Ltd. Considering the presence of a large number of small companies in the market, where industry players are continuously looking for business expansion, we expect this trend to continue in the coming quarters. Off-patented drugs on sale a lucrative opportunity: With a large number of drugs going off-patent in recent years, global players, including AstraZeneca, GlaxoSmithKline, Abbott Laboratories, Merck, and Sanofi, have expressed interest to sell-off their off-patented drug portfolios. This represents an attractive opportunity for Indian generic players to acquire these drugs and further expand in overseas markets, primarily the US. This would also provide companies the exact formulation and chemical ingredients for manufacturing the drug. However if a company chooses not to acquire these drugs, re-engineering the formulation would be a high-priced and time consuming process, clouded by the risk of its failure. In this regard, Lupin Ltd. is weighing the prospects to acquire a range of matured drugs being auctioned by GlaxoSmithKline. The pharmaceutical industry around the world is getting increasingly globalised, with the regulated markets (namely the US, the EU and Japan) evolving into the centres of innovation of cutting-edge technologies/ products, China having established itself as the manufacturer of large-scale raw materials, and India evolving into the best destination of development and manufacture of complex APIs as well as generic formulations. The M&A strategies of pharma companies around the world are driven off one or more of these underlying industry trends. In addition, the attractive growth prospects in under-penetrated emerging markets such as China, Latin America and India are also driving M&A behaviour. Notwithstanding the furore around the subjects of IPR/ Compulsory Licensing and drug price-control, we believe that the Indian pharma industry is attractively positioned to able to attract more and more foreign investment (greenfield as well as brownfield) to fund its global growth aspirations. Krishnakumar V Partner Lifesciences Transactions quarterly 3Q14 7

8 Infrastructure Divestitures gain prominence in power segment Transactions quarterly 3Q14 Overview: The infrastructure group, comprising of engineering services, diversified infra, logistics, power and utilities, and roads and highways sectors, saw 34 deals during the quarter with an aggregate disclosed value of US$1.6 billion. Power generation segment accounted for most of the value with nine deals worth US$1.3 billion. Key deal(s): The highlight of the sector s M&A activity in 3Q14 was Lanco Infratech Ltd. s (Lanco) sale of its Udyapi thermal power plant to Adani Power Ltd. for US$982 million to reduce its debt burden. Domestic power players raise funds to resolve debt and liquidity issues: The players are selling their respective power plants in an urge to scale down their debt burden and infuse the much needed liquidity. The sector saw few divestments including the aforementioned sale by Lanco and the sale of Jaypee Group s (Jaypee) hydro-power plants to JSW Energy Ltd. (JSW) for an undisclosed amount. JSW won the bid to acquire these assets post Reliance Energy Ltd. and Abu Dhabi National Energy Co. withdrew their agreements to acquire these assets. At the same time, the sector has also witnessed players raising funds via PE and qualified institute placement s (QIP) route. These included, ReNew Power Ventures PE funding and QIP fundraising by GMR Infrastructure Ltd. With resilient equity markets, the sector is expected to see this trend to continue as power players will likely divest more assets in an attempt to deleverage their debt-heavy balance sheets in near future. Foreign players continue to exhibit interest in the power generation sector: The players are increasingly looking to enter and expand their operations in the country, attracted by the favorable tax-breaks announced by the Government. However, we are likely to see investments mostly in operational and under-construction projects as some clarity is needed for the issues related to land acquisition. In this quarter, we saw foreign companies, including the UK-based Solargise Ltd. and Singapore-based Sembcorp Industries Ltd., expanding their presence in India. We see this trend to continue in the coming months. A large number of infrastructure projects in the Indian market today that are either operational or under advanced stages of construction, are attracting local and foreign investors. This trend will intensify even more in the future as the government begins to undertake policy initiatives to make infrastructure sector more attractive to investors. Kuljit Singh, Partner Power and utilities, Transaction Advisory Services 8

9 Cross-border scenario steady; the US was the most active M&A partner Analysis by geography Germany Inbound: 2 deals, undisclosed value Outbound: 2 deals, US$19.8m UK Inbound: 5 deals, US$2m Outbound: 3 deals, US$7.3m Japan Inbound: 1 deals, US$28m US Inbound: 13 deals, US$131m Outbound: 4 deals, undisclosed value Brazil Inbound: 1 deal, undisclosed value Outbound Inbound Deal flow Both inbound and outbound Only inbound or outbound Inbound deal activity remained steady in 3Q14, as the deal volume increased to 54 in the quarter from 45 in the same period last year, with the cumulative inbound deal value increasing to US$2.1 billion from US$1.7 billion. Foreign buyers continued to look for businesses with the objective of establishing a presence in the Indian market. Technology and health care reported maximum inbound flow in terms of volume. Outbound deals were up in terms of volume but declined in value. Aggregate disclosed deal value of outbound deals was US$262 million in 3Q14, down from US$2.7 billion in 3Q13, while deal count increased to 25 deals from 21 deals. Indian companies continue to remain cautious while considering outbound acquisitions as they are focussing more on deleveraging their balance sheets and improving operations. Transactions quarterly 3Q14 9

10 Indian M&A snapshot Exhibit 1: Industry break-up (3Q14) Overall M&A By value (in US$m) By count CBP DIP Healthcare Infra # M&E DIP FS Healthcare Infra # M&E M&M 174 Pharma 9 Pharma 258 PS 11 RE 182 RCP 17 Tech 141 Tech 27 Others 55 Others Source: ThomsonONE.con and EY analysis Exhibit 2: Deal type composition Deal count Deal value (US$ b) Domestic Inbound Outbound Total 3Q Q Q Q Q Domestic Inbound Outbound Total 3Q Q Q Q Q Source: ThomsonONE.con and EY analysis Transactions quarterly 3Q13 1

11 Exhibit 3: Industry break-up (3Q14) M&As below US$2 million* Auto CBP Healthcare Infra # M&E M&M Pharma RE Tech Others By value (in US$m) DIP FS Healthcare Infra # M&E Pharma PS RCP Tech Others By count Source: ThomsonONE.con and EY analysis Exhibit 4: Deal size composition (below US$2 million)** % 21% 25% 38% 49% 45% 25% 23% 24% 29% 61% 54% 4% 27% 26% 3Q13 4Q13 1Q14 2Q14 3Q Source: ThomsonONE.con and EY analysis CBP-Cement and building products, DIP-Diversified industrial products, FS- Financial services, Infra- Infrastructure (# consist of multiple sectors, including engineering services, diversified infra, logistics, power and utilities and roads and highways), M&E-Media and entertainment, M&M- Metals and mining, O&G-Oil and gas, PS- Professional services, RCP- Retail and consumer products, RE- Real estate; * Includes deals with undisclosed value; ** Does not include deals with undisclosed value Transactions quarterly 3Q14 11

12 Chapter2 Global M&A scenario Global M&A softened in 3Q14; year-till-date (YTD) value well above previous year s level Global M&A activity slowed during the quarter, registering a decline of 11% in volume and 22% in value. The Americas lead the activity in terms of value; EMEIA was on top in volume terms. Global M&A activity slowed down in 3Q14, as macroeconomic and geo-political uncertainties across the globe forced companies to pause for breath in an exceptional year for deal activity. The quarter witnessed 8,894 deals worth US$834 billion, representing a decline of 11% in deal volume and 22% in deal value as compared to 2Q14. However, 214 remains a positive year for M&A, as strong boardroom confidence, buoyed market sentiments and an otherwise stable economic environment has led to a substantial number of mega deals, which helped push M&A value to the highs seen during pre-crisis levels. YTD14 deal value stood at US$2.6 trillion, 53% higher than YTD13 and the highest value seen since YTD7 (US$3.4 trillion). The Americas dominated the activity in terms of value, primarily driven by increased investor confidence in the US, bolstered by the solid economic fundamentals and resilient equity markets of the country. With 2,813 deals worth US$528 million during the quarter, the region accounted for 63% of total global deal value. Despite recent challenges, global M&A outlook looks positive. According to EY s 11th biannual Global Capital Confidence Barometer (CCB), a survey of more than 1,6 senior executives in over 6 countries, 49% of respondents anticipate pursuing acquisitions in the next 12 months the highest number for three years. US M&A should remain firm, supported by improving fundamentals. With strong 2Q14 corporate earnings, up-scaled GDP growth and an interest rate rise still not expected till early-215, we expect to report high levels of sustained activity over the coming months. European M&A activity will likely remain steady through the year end, backed by continued investor confidence, and low market volatility. However with significant economic and geo-political obstacles to navigate in the region, there remains a downside risk in the near future. M&A activity in the Asia-Pacific region is expected to hold its ground through the remaining year, with major regional players showing signs of improved economic strength. Deal environment by sector and area by value, 3Q14 Top 5 announced deals by value, 3Q14 Transactions quarterly 3Q14 Americas EMEIA* Asia- Pacific** Total Oil and gas 14% 1% 1% 16% Real estate 8% 5% 3% 16% Consumer products and retail 9% 3% 2% 14% Telecommunications 9% 1% % 1% Technology 6% 1% 2% 9% Diversified industrial products 6% 2% 1% 9% Others 12% 8% 6% 26% All sectors 63% 2% 16% 1% Source: ThomsonONE.com and EY analysis *EMEIA is Europe, Middle East, India and Africa; **Asia-Pacific includes Japan Note: Data is continuously updated and therefore subject to change. Target Sector Nation Acquiror Value (US$b) Kinder Morgan Energy Partners Source: ThomsonONE.com Oil and gas US Kinder Morgan Inc 58.6 T-Mobile US Inc Telecommunications US Iliad SA 35. Lorillard Inc Sigma-Aldrich Corp Tim Hortons Inc Consumer products and retail Diversified industrial products Consumer products and retail US Reynolds American Inc 27.7 US Merck KGaA 16.5 Canada Burger King Worldwide Inc

13 Key global transaction destinations (3Q14) UK 339 deals, US$13.4b 21 deals, US$14.5b 4 deals Russia 326 deals, US$4.b 58 deals, US$.5b 3 deals, US$.7m US 1,682 deals, US$288.9b 359 deals, US$167.9b 47 deals, US$2.3b China 84 deals, US$65.6b 128 deals, US$9.7b 8 deals, US$72.8m Brazil 56 deals, US$11.3b 61 deals, US$6.6b 1 deal, US$4.3m South Africa 42 deals, US$1.7b 24 deals, US$.2b 1 deal, US$4.8m India 124 deals, US$2.4b 79 deals, US$2.3b Domestic Cross-border Unknown Source: ThomsonONE.com and EY analysis Transactions quarterly 3Q14 13

14 Chapter3 India economy promises a turnaround India s economy registered some green shoots in 3Q14, indicating that a possible recovery is on the cards. The recently released real GDP growth and current account deficit data exceeded expectations. Furthermore, equity markets scaled new peaks in September indicating optimism for growth over hopes for implementation of better reforms by the new government. GDP accelerated to 5.7% year-onyear (y-o-y) growth in 2Q14, the highest in the past two-and-a-half years, primarily due to front-loading of government expenditure. All sectors reported growth during the quarter. Improvement in key sectors of the economy, accompanied by policy reforms taken by the new government, can deliver sustained growth in the coming months. Current account deficit (CAD) also improved to 1.7% of GDP in 2Q14 from 4.8% in the corresponding quarter last year, on the back of sharp decline in imports due to weak demand and the Government s policy on curbing gold imports. This trend is likely to continue in the coming months, as the GoI is expected to continue its efforts to monitor CAD, by imposing import restrictions on non-productive goods, including gold. India recorded foreign direct investment (FDI) inflow of US$11.5 billion during first four months in FY15 (April-July 214), up from US$8.4 billion over the same period in FY14 on the back of improved investor confidence. Telecommunications, pharmaceuticals, and financial and business services were three largest recipients. FDI inflows are likely to see further momentum in the coming months with recently introduced reforms on relaxation of FDI norms in insurance and defence sectors. On the other hand, other macroeconomic indicators, including industrial production and inflation were relatively muted. While, industrial production registered a.5% y-o-y growth in July, the slowest in four months, consumer price inflation continued to remain high, reaching 7.8% in August. With the household inflationary expectations remaining high, the Reserve Bank of India is expected to keep its reserve rates unchanged. India s economy appears to be recovering from a period of sluggish growth, though it will continue to face challenges with persistently high inflation and tight monetary policy. The GoI s moves to foster investment inflows, infrastructure development and establish a robust decisionmaking mechanism, to improve ease of doing business, are expected to boost economic growth of the country. Transactions quarterly 3Q14 Real GDP growth by region (% change y-o-y) 1% 8% 6% 4% 2% % -2% 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 7.3% 5.5% 2.5% -.3% -.4% 2Q14 4Q14 World India Russia China Brazil Source: Oxford economics 2Q15 IIP and CPI 12.% 1.% 8.% 6.% 4.% 2.%.% Oct 13 Source: CMIE Dec 13 CPI Feb 14 Apr 14 IIP Jun 14 Aug 14 Current account deficit % % 2.7% % % % 7. 6% 5% 4% 3% 2% 1% % FY9 FY1 FY11 FY12 FY13 FY14e CAD (in US$b) CAD (% of GDP) Source: RBI (FY9-13), Prime Minister s Economic Advisory Council (FY14 estimate) 14

15 Chapter4 Policy reforms coupled with quest for growth bodes well for deal activity Outlook The prospects for India look encouraging, with the new leadership demonstrating its commitment to put the economy back on track towards high growth. The new Government is working towards reforms to attract more private investment, accelerate GDP growth rate and reduce fiscal deficit. Subsequently, equity markets also reported a substantial uptick in the last quarter over hopes of an improvement of the pace of economic recovery. We have also seen Standard & Poors upgrading India s rating recently, acknowledging the evolving facelift of the financial state of India. In addition, the Government has launched the Make in India campaign to give momentum to long-term growth of the country. The campaign, through the introduction of new industry licencing procedures, increasing focus on infrastructure development and relaxed FDI reforms, aims at fostering innovation, protecting intellectual property, and creating more jobs via building best-in-class manufacturing facilities. The Prime Minister of India s (PM) recent meetings with China, Japan and US leaders has set a stage for collaboration and investments from these countries. The Japanese government has announced its decision to double its investment in India to around US$35 billion over the next five years. India also signed agreements with China, according to which China will invest US$2 billion in India s infrastructure over five years. These measures have created a positive environment for increased inbound activity. Domestically, companies took the M&A route to enhance presence and growth. This trend is expected to continue and lead to consolidation in industries such as e-commerce, retail and telecom in the coming months. Additionally, with highly leveraged balance sheets, corporate entities are divesting to raise funds and deleverage. This strategy is likely to be followed to sustain and enhance growth with the objective of creating value for stakeholders. On the outbound front, Indian IT-BPO players hunt for international businesses is expected to gather pace as they are look for inorganic growth in various verticals and capabilities in the Americas and Europe. Furthermore companies in the natural resources space are likely to continue looking for overseas assets to secure supplies, primarily driven by India s escalating energy needs. As we look ahead, M&As over the next few quarters are expected to ride on the wave of improved investor confidence, fuelled by a relatively stable political scenario. Moreover, with the Government s continued focus on policy reforms and companies hunger for growth via investments and acquisitions, we foresee M&A to strengthen as we sail through FY15. Transactions quarterly 3Q13 15

16 About EY s Transactions Advisory Services in India EY s Transaction Advisory Services team in India offers high-quality transaction advice to local and foreign private investors, private equity firms and corporations. We have extensive experience in structuring domestic, as well as cross-border deals. Our matrix structure, organized around key transactions services and industry verticals, enables EY to offer an unparalleled blend of deep functional expertise and sector focus. Transactions quarterly 3Q14 We offer our experience and support across multiple areas, including finance and accounting, taxation, IT, operations, human resources, transaction integration, real estate and market assessment. 16

17 At EY, we believe that we are best placed to provide you with the necessary expertise to meet your capital agenda. Ranked #1 on deal count, for the 12th consecutive year (22-213), in the Indian M&A financial advisory league tables Bloomberg Ranked as #1 brand for Transaction Advisory Services in India for two consecutive editions of the biennial TNS Global Brand Survey 213, 211 International Accounting / Due Diligence firm of the year, 212 M&A Advisory Financial Advisor of the Year, India 212 AVCJ India Private Equity & Venture Capital Awards Most Active Transaction Advisor Award PE and M&A for 212, 211, 21 and 29 by Venture Intelligence Financial Advisor of the Year M&A Award India, in 211, 29 and 28 Financial Times & Mergermarket Investment Bank of the Year Private Equity, 211 VCCircle Awards Cross Border Deal of the Year Middle Markets, 211, India M&A Atlas Awards Our portfolio of services include: Raising capital equity, debt and mezzanine financing through various channels Deploying capital complete planning and structuring of mergers, acquisitions and alliances including partner search, due diligence, valuations, capital structure implications Optimizing capital divestments, feasibility studies and strategic reviews, working capital management, tax structuring Preserving capital liquidity management, refinancing or restructuring of financial obligations, valuation reviews Transactions quarterly 3Q14 17

18 Methodology Transactions quarterly is based on EY s analysis of ThomsonONE.com s M&A data. Data used in this edition is for the period 1 July 214 to 3 September 214. Deals have been taken from ThomsonONE.com through the Advanced M&A search, where an Indian company was either a target, acquirer, target s ultimate parent or acquirer s ultimate parent. The terminated deals have been excluded. Deals have been taken where deal status as per ThomsonONE.com was either pending, partially complete, completed, pending regulatory or unconditional. Private equity deals or deals with a financial sponsor have been excluded. Deal values have been taken as stated in ThomsonONE.com (accessed 1 October 214) or as per the company press release in certain cases. All amounts are in US$ unless otherwise stated. The conversion rate of non-us$ deals are in accordance with ThomsonONE.com guidelines the foreign exchange rate as on the deal announcement date. For our analysis, deals have been classified into: Sectors: based on target s business Inbound, outbound and domestic: based on target/ acquirer/target s ultimate parent and acquirer s ultimate parent countries Deal size: based on announced deal values Average deal size has been calculated as total deal value divided by number of deals with disclosed value. The numbers have been rounded off unless otherwise indicated. For any further details on the deal inclusion criteria used by ThomsonONE.com, contact us at eytasindia@in.ey.com.. Transactions quarterly 3Q14 18

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20 Ernst & Young LLP EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Ernst & Young LLP is one of the Indian client serving member firms of EYGM Limited. For more information about our organization, please visit Ernst & Young LLP is a Limited Liability Partnership, registered under the Limited Liability Partnership Act, 28 in India, having its registered office at 22 Camac Street, 3rd Floor, Block C, Kolkata Ernst & Young LLP. Published in India. All Rights Reserved. EYIN ED None This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither Ernst & Young LLP nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor. Artwork by: JG EY refers to the global organization, and/ or one or more of the independent member firms of Ernst & Young Global Limited