As per Dealogic, despite ranking among the top 3 locations for M&A deals in the January-September 2011 period, India was also the country that witnessed the maximum decline in the combined value of M&A deals
New Delhi: The value of India-focused merger and acquisition (M&A) deals touched $39 billion in the first nine months of this year, a significant 31% decline over the corresponding period last year, reports PTI quoting global deal tracking firm Dealogic.
According to Dealogic, "India-targeted volumes (value) totalled $39 billion in the first nine months of 2011, down 31% from $56.1 billion on the same period of 2010."
As per Dealogic, despite ranking among the top 3 locations for M&A deals in the January-September 2011 period, India was also the country that witnessed the maximum decline in the combined value of M&A deals.
The combined value of M&A deals in the third quarter was just $4.7 billion, the lowest since the second quarter of 2005, when the deal value stood at $4.1 billion.
Meanwhile, despite a 12% dip in the third quarter, the Asia-Pacific (excluding Japan) region witnessed M&A deals with the highest combined value for a nine-month period on record, at $406.1 billion in 2011, up 13% in comparison to the year-ago period.
India was the third-most targeted nation in the Asia-Pacific region, accounting for M&A deals worth $39 billion, behind China ($134.7 billion) and Australia ($104.9 billion), Dealogic said.
In the Asia-Pacific region, the nations that witnessed a slump in deal activity in the nine-month period include India (down 31%), Malaysia (15%) and Singapore (4%).
A sector-wise analysis of the Asia-Pacific shows that real estate witnessed the biggest M&A deals in terms of their combined value during the period-at $48.9 billion-followed by mining ($48.3 billion) and finance ($42.5 billion), the report said.
"The $12.4 billion bid for Foster's Group by SABMiller was the largest deal in the Asia-Pacific (excluding Japan) in the first nine months of 2011 and is the only over $10 billion food & beverage deal on record in the region," Dealogic added.
Meanwhile, the value of M&A deals worldwide totalled $2.15 trillion during the first nine months of 2011, a 7% rise compared to the year-ago period.
The value of global M&A deals in the January-September period witnessed an increase despite the fact that their combined worth in the third quarter was just $599 billion, down 23% compared to $783 billion in the third quarter of 2010.
The value of global M&A deals in the third quarter is the lowest since the second quarter of 2010, when it stood at $592.9 billion, Dealogic said.
Investments in GDRs have delivered negative 52% average return on investment. Information technology, media and consumer staples companies were the major underperformers. Last year GDRs were a good option due to rising local markets, this year this route seems to have soured for global investors
According to a report released today by one of the largest research houses in India, out of 40 global depository receipts (GDRs) issued by Indian companies in 2010, investors have lost money in 85% of the issues, with four out of five issues giving a negative return of 35% or more. As on 15th September, the average return on investment (a measurement of the difference in the offer price and the market price) by all the GDRs issued in 2010 was a negative 52%. The underperformance is significant when compared to the average return of a negative 7% by the S&P CNX 500 during the same period. The report was released by CRISIL Research today.
Indian companies have been the most active GDR issuers, accounting for about 68% of the total listed GDRs on the Luxembourg Stock Exchange as of December 2010. During 2010, Indian companies, predominantly small- and mid-cap companies, raised around Rs5,680 crore ($1.20 billion) through the GDR route.
According to Tarun Bhatia, director, Capital Markets, CRISIL Research, "Companies generally prefer the GDR route for fund-raising when the global sentiment for emerging markets is strong. During 2010, many Indian companies were able to attract foreign investors through the GDR route given the performance of equity markets and the strong domestic growth rate of over 8%. Further, lower disclosure norms on end-use of funds make fund-raising through GDRs comparatively easier for domestic companies."
CRISIL Research analysis further reflects that, in absolute terms, the market value of the funds mobilised through GDRs has eroded by about 47% (difference between capital mobilised and current market value) to Rs3,030 crore ($0.6 billion), with most GDRs trading 40%-60% below their offer price. In percentage terms, Teledata Technology Solutions' GDR is the worst performer with its price on 15th September trading 93% below the offer price. On the other hand, Rainbow Papers Ltd's issue has been the best performer with its price trading 148% higher than the offer price.
However, the number of GDRs issued in 2011 has slowed down. Just 12 Indian companies have raised Rs940 crore ($0.20 billion) through GDRs during 2011, as compared to 34 companies that raised Rs4,510 crore ($1 billion) during the corresponding period in 2010.
Chetan Majithia, head, CRISIL Research added in the report, "Volatility and weak performance of Indian equity markets in 2011 have damped investor sentiments. This coupled with the weak performance of the past GDRs has made them less attractive to foreign investors."
Hitachi and SFO Technologies agree to form Indian joint venture company for control systems of thermal power business
Hitachi Ltd and SFO Technologies Pvt Ltd, a NeST Group Company, will establish a joint venture in the field of advanced control systems for thermal power plants. The joint venture company, Hitachi NeST Control Systems Pvt Ltd is scheduled to be established in October 2011 and to be based in Bangalore, India. Hitachi India Pvt Ltd, a wholly owned subsidiary of Hitachi and SFO Technologies will own the joint venture's shares 70% and 30%, respectively.
Based on this agreement, Hitachi and SFO Technologies will promote to expand their control systems businesses in India. Hitachi NeST Control Systems Pvt Ltd is targeting sales of approximately Rs1.5 billion (2.6 billion yen) in the fiscal year ending in March 2015.
Hitachi and SFO Technologies will form the joint venture to engineer, manufacture, commission and after-service advanced control systems for thermal power plants. This joint venture is aimed to capitalise these opportunities and talent that Indian market will provide. Hitachi has been using SFO Technologies' engineering services in thermal power control systems field for the last 10 years for projects both inside and outside India. In the joint venture, Hitachi will bring in advanced control technology for thermal power plants. SFO Technologies will merge its existing 10 years experienced control systems division with the new joint venture company and offer its manufacturing space and expertise in Bangalore for localising the technology in India.