Deal street hits three-year high at $90.4 bn in first 9 months: Report

Notwithstanding the challenges posed by the pandemic, the deal street remained buoyant pushing the overall deal value to a three-year high of $90.4 billion during the first nine months of 2021, a 35.1 per cent increase in value over the same period last year, according to an industry report.

During the third quarter ending September, total deals grew by a tepid 3.8 per cent, according to the leading provider of financial markets data and infrastructure globally Refinitiv, an LSEG Business. The report also noted that IPOs alone grabbed as much as $9.1 billion of the deal value during the year.

The initial public offerings (IPOs) hit record levels raising $9.2 billion in the first nine months this year and grew more than four-times the last year with the number of IPOs numbers clipping at 160.7 per cent. Over half of the IPO proceeds came from just 34 issues worth $5.1 billion and Zomato's $1.3 billion issue in July was the biggest issue.

Of the $90.4 billion overall deals in the first nine months of 2021, which is a three-year high, in-bound deals grew 66.4 per cent to reach $48.6 billion, which is the the highest first nine months period since records began in 1980, according to Elaine Tan, a senior analyst at Refinitiv.

Deal making has shown considerable resilience this year, despite the challenges posed by the pandemic. With a 3.8 per cent jump in deal value in the third quarter, the over all deal value was pushed to a three-year high of $90.4 billion during the first nine months of 2021, which is 35.1 per cent jump in value terms annualised, Tan said.

She attributed the key drivers for this record jump to higher ample liquidity, private equity deals and the growing focus on sustainability, growing investor appetite for good assets. Since the same reasons continue, the reminder of the year will also continue to provide a conducive environment for deal making.

On the IPO street which has already grown over four times at $9.2 billion, the robust issue pipeline such as the anticipated listing of Oyo Hotel, the market is poised to potentially exceed the all-time annual record set in 2017 ($10.8 billion). If LIC issue gets going, then, it will be record that will stand for decades.

Average deal value totalled $105 million, up 14.4 per cent year-on-year, as 17 deals of over $1 billion were announced during the period with a cumulative value of $38.8 billion, compared to 12 deals above $1 billion totalling $30.1 billion last year.

India-bound M&As stood at $83.1 billion, up 39.8 per cent from the same period last year. Domestic M&As amounted to $34.5 billion, up 14.1 per cent led by Piramal Capital & Housing Finance taking over Dewan Housing Finance through the NCLT process for $4.7 billion (or Rs 34,2500 crore).

Of the total, the US was the most active foreign acquiror with $20.3 billion worth of deals, up 19.3 per cent, accounting for 41.7 per cent of all deals.

On the hand outbound M&A transactions hit a three-year high and totalled $4.5 billion, up 18.2 per cent from a year ago and Britain was the top beneficiary with 15 deals worth $2.1 billion, or 47.2 per cent of all deals from the country share, while the US saw the greatest number of acquisitions with 41 deals worth $1.4 billion, or 31.6 per cent of the market share.

Majority of the deal making activity involving India targeted the financials sector which totalled $21.9 billion in deal value, which was up 156 per cent from a year ago and captured 24.2 per cent market share. Energy & power accounted for 15.2 per cent market share after a 12.1 per cent growth in value to $13.7 billion. High technology, which saw the highest number of deals, captured 14 per cent and saw a 182.7 per cent growth in value worth $12.7 billion.

Retail grew 44.2 per cent in value at $9.3 billion or 10.4 per cent of the market share.

Of all the deals, the equity capital markets raised $22.1 billion, down 32.7 per cent in proceeds from 2020, despite a 65.6 per cent growth in number of offerings as deals were done in smaller value.

On the other hand, the overall bond street was overall down 19.8 per cent at $16.6 billion. Beyond diversification from domestic bond markets, sustainability-themed targets emerged as a significant key driver. ESG-related bond issuance accounted for 43 per cent of the dollar-denominated bond proceeds, raising $7.1 billion in proceeds.

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