KCM M&A Dealscape 2018

For private circulation only
M&A dealscape
January 2018 to December 2018
Deal dynamics in India

2
Contents
Section Page
1. Macro economic snapshot 3
2. Overall M&A deal activity 7
3. M&A deal activity – domestic vs cross border 8
4. M&A deal activity by sector 9
Appendix Page
A. Glossary 20
B. References 21
C. Disclaimer 22

3
Macro economic snapshot
Challenges
• The growth momentum in the economy has been weakening with
high import dependencies, slowdown in private investments, weak
aggregate demand and a tepid wage growth rate.
• A rapidly depreciating rupee and rising crude oil prices adversely
impacted India’s current account deficit. Further, the Indian market
lost its attractiveness among FPIs and witnessed withdrawals driven
by negative market sentiment and political uncertainty ahead of the
general elections.
• Whilst India has done considerably well in terms of moving up the
ranking in terms of ease of doing business, there is lot to done to
reach a level that creates enthusiasm for overseas investors. FDI is
important as India would require huge investments in the coming
years to overhaul its infrastructure sector to boost growth. A decline
in foreign inflows could put pressure on the country's balance of
payments and may also further impact value of the rupee.
Summary
• India retained its position as the world’s fastest growing large
economy in 2018 combating volatility in an environment of rising
oil prices, a devalued currency and increased trade wars.
• India recorded a further jump of 23 positions on the World Bank’s
ease of doing business index by scaling up to 77th rank in 2018 from
100th rank in 2017.
• Indian economy witnessed a sporadic growth rate of 8.2% during
Apr-Jun 2018, which subsequently plunged to 7.1% in the following
quarter. In run up to the general elections, Government is now
shifting focus to expedite reforms with a view to accelerate growth.
• A major positive development during the year was the progress
made under IBC. The NCLT has so far resolved insolvency and
bankruptcy proceedings involving more than INR 60,000 Cr and is
expected to swell much beyond in 2019 with several big ticket
insolvency cases in the process of being resolved.
Outlook
As the government shifts focus towards accelerating growth, the investment cycle that has started picking up will gather further strength as more
private investments are expected. At the same time, the current moderate growth situation, ahead of the general elections, has forced the government
to spend more leading to increased fiscal and inflationary pressures.
However, active measures taken by the government to promote growth and investment, recapitalisation of public sector banks and increased GST
collections contribute to an optimistic outlook coupled with a forward looking budget recently presented by the ruling NDA government.

4
Foreign direct investment (FDI) - Equity inflows
• India received USD 22 Bn of FDI during the first half of 2018 (Jan-
Jun 2018) and made it to the top 10 economies receiving the most
FDI during this period, ahead of China. However, FDI inflows
declined to USD 9.9 Bn during Jul-Sep 2018 in the backdrop of a
global decline in FDI flows.
• Overall, the recent global financial scenario has not been optimistic
owing to the tax reforms implemented by the US government to
bring home higher earnings from abroad.
• However, the Government is taking steps to promote investment by
making major sectors open to 100% FDI and also initiating
regulatory and procedural reforms.
Gross domestic product (GDP)
Note: GDP for Oct-Dec 2018 is as per Financial Express estimate
• The Indian economy grew at a decent pace up to Jun 2018. The
economic growth during Apr-Jun 2018 at 8.2% was at its highest in
nine quarters.
• However, GDP growth rate declined to 7.1% in Jul-Sep 2018 and is
estimated at 7.3% in Oct-Dec 2018. The decline in growth was
primarily a result of weak Rupee, rising crude oil prices, reduction in
output and tight liquidity conditions in the financial markets.
• Despite recording slower growth in GDP, India’s growth rate
remained ahead of China. Further, GDP as well as GVA growth
improved as compared to the same quarter in the previous year.
10,587
8,916
12,752
9,912
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Oct-Dec'17 Jan-Mar '18 Apr-Jun '18 Jul-Sep '18
USDMn
7.7%
8.2%
7.1%
7.3%
6%
7%
7%
7%
7%
7%
8%
8%
8%
8%
8%
Jan-Mar '18 Apr-Jun '18 Jul-Sep '18 Oct-Dec '18
GDPgrowthrate

5
Inflation (WPI) and Interest rates
Note: WPI% for Nov’18 and Dec’18 are provisional
• Wholesale price index was at a high between Jun-18 to Oct-18
followed by a gradual decline. The increase was primarily driven by
food and fuel prices. This was followed by a decline in Nov-18 and
Dec-18 (provisional), due to the decline in global crude oil prices,
disinflation in prices of primary food products and some impact of
the appreciation in the rupee on the price of imports.
• The RBI increased the repo rate by 25 basis points consequently for
the second time in Aug-18 to 6.5% with a view to curtail the rising
inflation and maintain a target of 4%. This move was made amidst
an uncertainty in global financial markets, rising trade barriers and
vulnerable crude oil prices.
Foreign exchange rate movement
• Value of Indian rupee against the US dollar witnessed an all time
low during 2018, with a high of INR 63.6 per USD in Jan-18 and a
low of INR 73.7 in Oct-18. The plunge was primarily a result of
higher oil prices, fears of global trade war triggered by US and
China’s retaliatory import policies, FPI outflows due to volatility in
stock markets and widening current account deficit.
• In response to the above, the government took measures including
removal of withholding tax on masala bonds, relaxation for FPI
rules, easier ECB facilities, and curbs on non essential imports to
contain the widening current account deficit. During the last two
months of 2018, drop in oil prices provided a temporary relief to the
continuing fall in value of rupee.
63.6 64.4 65.0 65.6
67.5 67.8 68.7 69.5
72.2
73.7
71.8
70.7
58.0
60.0
62.0
64.0
66.0
68.0
70.0
72.0
74.0
76.0
Jan
'18
Feb
'18
Mar
'18
Apr
'18
May
'18
Jun
'18
Jul
'18
Aug
'18
Sep
'18
Oct
'18
Nov
'18
Dec
'18
INR/USD
3.0% 2.7% 2.7%
3.6%
4.8%
5.7% 5.3%
4.6%
5.2% 5.5%
4.6%
3.8%
0%
1%
2%
3%
4%
5%
6%
Jan'18
Feb'18
Mar'18
Apr'18
May'18
Jun'18
Jul'18
Aug'18
Sep'18
Oct'18
Nov'18
Dec'18
WPI%

6
Purchasing manager’s index (PMI)
• Manufacturing PMI recorded successive months of expansion (i.e.
above 50) during 2018. This was facilitated by increase in output and
new orders, input price inflation, increase in export orders, reduction
in inventories held by manufacturing companies and an increase in
employment growth rate.
• Service sector PMI reflected intermittent expansion and contraction
up to May-18 due to a slowdown in demand and employment in
service sector. However, it witnessed consistent expansion after Jun-
18 primarily supported by increase in service orders, rising input
costs due to inflationary pressure, and a consequent rise in
employment rate.
Index of industrial production (IIP)
Note: IIP growth % for Nov’18 is provisional and Dec’18 is as per CARE forecast
• IIP comprises of mining, electricity and manufacturing sectors. The
high growth in Jun-18 and Jul-18 was primarily due to improvement
in performance by the manufacturing sector and higher offtake of
capital goods and consumer durables.
• IIP growth rate was highest at 8.4% in Oct-18 due to a favorable
base effect and robust output in all key sectors aided by a boost in
demand ahead of the festive season. However, industrial growth
plummeted to 0.48% in Nov-18, the lowest in 17 months, as a result
of post festive season decline in manufacturing, an adverse base
effect and tighter liquidity due to slowdown in the NBFC sector.
52.4 52.1
51.0
51.6 51.2
53.1
52.3
51.7 52.2
53.1
54.0
53.2
51.7
47.8
50.3
51.4
49.6
52.6
54.2
51.5
50.9
52.2
53.7 53.2
44
46
48
50
52
54
56
Jan'18
Feb'18
Mar'18
Apr'18
May'18
Jun'18
Jul'18
Aug'18
Sep'18
Oct'18
Nov'18
Dec'18
PMI
Manufacturing PMI Service PMI
7.5%
6.9%
5.3%
4.5%
3.8%
7.0%
6.5%
4.8%4.5%
8.4%
0.5%
2.50%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Jan'18
Feb'18
Mar'18
Apr'18
May'18
Jun'18
Jul'18
Aug'18
Sep'18
Oct'18
Nov'18
Dec'18
YoYIIPgrowth%

7
Overall M&A deal activity
• Further, improved regulatory framework after the introduction of the
IBC, RERA and GST made inbound investments more attractive.
IBC in particular has been in focus backed by the urge to resolve
large amounts of NPA and steps are being taken to speed up the
insolvency process.
• Another major contributor to increased M&A activity during H1 has
been the need for consolidation, with domestic companies increasing
focus on scale of operations and market expansion in light of
growing competition and efforts to optimize capital structures.
• At the same time, a number of assets are on the block as huge
corporates are increasing focus on churning their portfolios and
looking to exit non-core operations and increase strategic
investments.
• However, as suggested by the macro economic indicators, Indian
economy faced a slowdown during the second half of the year, with a
low GDP growth rate, reduced FDI and a devaluing rupee. This
sentiment was reflected in the M&A activity which plummeted to
less than 50% in value terms.
• Further, uncertainties surrounding the upcoming general elections,
continuing trade wars in the global environment, exchange rate
fluctuations and poor fiscal conditions owing to high oil prices, may
further act as a temporary roadblock.
Overall M&A deal activity
Summary
• M&A deal activity in value as well as volume terms was higher
during the first half of 2018 as compared to the last six months.
• M&A activity during the first half of the year was indicative of a
relatively stable economy post major structural changes in the
previous two years, liberalization of government policies and
continued efforts to remove regulatory hurdles and attract foreign
investment.
54,795
24,410
271 186
0
50
100
150
200
250
300
-
10,000
20,000
30,000
40,000
50,000
60,000
H1 2018 H2 2018
USDMn
Half yearly deal activity
Value Volume

8
M&A deal activity – domestic vs cross border
• M&A deal volumes were dominated by domestic deals in 2018.
However, in terms of value, cross border deals outpaced domestic
deals in H2 2018. Higher domestic deal value in H1 2018 was driven
by a few large ticket deals including Tata Steel’s acquisition of
Bhushan Steel under the IBC for USD 5.6 Bn, and ONGC’s strategic
acquisition of majority stake in HPCL for USD 5.8 Bn. Domestic
deal value in H2 2018 was primarily contributed by HUL’s
acquisition of GSK Consumer Health business for USD 4.5 Bn.
• Key sectors contributing to higher domestic deal values were
materials, telecom, energy and consumer staples. Whereas, major
contributors to deal volumes were IT, financials, consumer
discretionary and industrials sectors.
M&A deal activity – domestic vs cross border
• Higher cross border deal value during H1 2018 was primarily driven
by a major inbound deal i.e. Flipkart’s acquisition by Walmart for
USD 16 Bn, whereas the major driver during H2 2018 was a surge in
outbound activity. Major deals in H2 2018 included UPL’s
acquisition of Arysta Lifescience for USD 4.2 Bn, acquisition of US
based aluminium producer Aleris Corp by Hindalco’s arm Novelis
for USD 2.6 Bn, and Aurobindo Pharma’s acquisition of the
dermatology and oral solids business of Sandoz Inc.
• Key sectors contributing to higher cross border deal values were
consumer discretionary, materials and IT. Whereas, healthcare and
industrials sector contributed significantly to deal volumes.
32,576
8,838
191
120
-
50
100
150
200
250
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
H1 2018 H2 2018
USDMn
Domestic
Value Volume
22,220
15,57280
66
-
20
40
60
80
100
-
5,000
10,000
15,000
20,000
25,000
H1 2018 H2 2018
USDMn
Cross border
Value Volume

9
M&A deal activity by sector
Summary (contd.)
• IT sector contributed c. 7% in H1 and c. 9% in H2 of the total M&A
deal values primarily comprising of deals in the software and
services space. Deals were primarily driven by investments in
emerging technologies.
• Energy sector contributed c. 11% of the total M&A deal values in
H1 that primarily comprised of the deal representing ONGC’s
strategic acquisition of HPCL.
• Consumer staples represented c. 21% of the total M&A deal values
in H2. Major activity in this sector was observed in the food
products industry with HUL’s acquisition of GSK Consumer Health.
• Industrials contributed c. 5% in H1 and 7% in H2 of the total M&A
deal values during the period with major activity witnessed in the
engineering and electrical equipment industry.
• Utilities sector contributed c. 6% in H1 and 4% in H2 to the total
M&A deal values with major activity in the electric utilities space,
which primarily included thermal and renewable power generation
businesses.
• Healthcare sector represented c.13% of the total M&A deal values in
H2. Major activity was observed in the healthcare services and
pharmaceuticals space.
• Financials contributed c. 4% in H1 and 3% in H2 to the total M&A
deal values, wherein major activity was observed in consumer
finance, real estate, insurance and diversified financial services.
Summary
• Consumer discretionary sector contributed c. 32% in H1 and c. 9% in
H2 of the total M&A deal values. M&A activity was dominated by
cross border deals in the e-commerce retail industry led by Walmart’s
acquisition of Flipkart.
• Materials sector contributed c. 21% in H1 and c. 32% in H2 of the
total M&A deal values in 2018, primarily led by deals in the steel
and alloys industry.
• Telecom sector represented c. 13% in H1 and c. 2% in H2 of the total
deal values, primarily due to consolidation and divestment in the
telecom tower and infrastructure businesses.
17,576
2,274
11,743
7,787
6,929
417
4,015
2,256
5,878
5,203
2,812
1,650
3,087
961
3,227
2,117 635
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
H1 2018 H2 2018
Financials
Health Care
Utilities
Industrials
Consumer Staples
Energy
Information technology
Telecommunication Services
Materials
Consumer discretionary

10
Consumer discretionary
Summary
• Consumer discretionary sector comprises of industries such as
consumer durables & apparel, consumer services, media, retailing,
and automobiles & components.
Key deals – H1 2018
• Walmart’s acquisition of Flipkart for USD 16 Bn gave Walmart a
much needed entry into the Indian retail space against its US arch
rival Amazon. The deal also provided a highly profitable exit to the
early stage PE/VC investors in Flipkart.
• Reliance integrated its digital music service JioMusic with music
app Saavn in a deal valued at USD 227 Mn. The deal is expected to
strengthen Jio’s position in the Indian streaming market.
• Cox and Kings Limited’s divestment of its education business, HB
Education Limited to Midlothian Capital Partners, a UK based PE
investor for USD 604 Mn with a view to unlock value and maximize
shareholder returns.
• Reliance Industries Ltd acquired majority stake in Hathway Cable
and Datacom Ltd for USD 600 Mn and Den Networks Ltd for USD
430 Mn, in a move aimed at becoming the largest player in the
broadband and cable TV and DTH market.
Outlook
Indian consumer market is witnessing growing demand supported by rise in disposable income, policy support in the form of FDI, measures to
reduce dependence on imports through incentives and increased investment. The Government has shown its support by approving 100% FDI in cable
and DTH platforms, Electronics Systems Design & Manufacturing sector. Hitherto, e-commerce was riding a wave in the consumer industry;
however, this trend may not sustain due to the recent regulatory changes governing the online retail space. Going forward, a convergence across
technology, media and telecom value chain is expected in terms of M&A deals.
17,576
2,274
50
31
-
10
20
30
40
50
60
-
5,000
10,000
15,000
20,000
H1 2018 H2 2018
USDMn
Value Volume

11
Materials
Summary
• Materials sector includes chemicals, construction materials,
containers & packaging, metals & mining, and paper & forest
products.
• Tata Steel’s acquisition of debt-laden Bhushan Steel for USD 5.6 Bn
vide a resolution plan submitted in accordance with the guidelines
under IBC was the largest deal in this space.
• Acquisition of bankrupt Monnet Ispat & Energy Ltd by JSW Steel,
AION Investments, Creixent Special Steels Ltd and JSW Techno
Projects Management Ltd for USD 1.6 Bn under IBC.
• UPL Corporation acquired Arysta Life Science Inc. and its
subsidiaries for USD 4.2 Bn, making UPL one of the largest crop
protection companies with differentiated product portfolio, an
integrated supply chain and deep distribution capabilities.
• Hindalco’s wholly owned subsidiary Novelis Inc acquired Aleris
Corporation, a global aluminium major, for USD 2.6 Bn as part of its
growth strategy in aluminium value added products and to enhance
access to world class manufacturing capabilities for its existing
Indian operations.
Outlook
Opportunities in the cement industry are attractive as the government increases focus on infrastructure and housing for all. Further, a growing power
and cement industry, coupled with an increase in iron and steel demand, will aid the growth of metal and mining sector. Also, the government has
allowed 100% FDI in mining sector and exploration of metals and non-metal ores. Significant deal activity may be observed as players further
consolidate their market positions.
11,743
7,78737
13
-
5
10
15
20
25
30
35
40
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
H1 2018 H2 2018
USDMn
Value Volume

12
Telecommunication
Summary
• This sector primarily includes wireless and telecommunication
services and related infrastructure.
• Mobile tower firm Bharti Infratel is slated to merge with Indus
Towers to form the largest mobile tower operator outside China. The
combined entity will be jointly controlled by Airtel and Vodafone.
Erstwhile shareholders’ (Vodafone, Idea and Providence) 58% stake
in Indus Towers was valued at USD 6.2 Bn.
• Reliance Industries’ digital music service arm Jio Music’s strategic
integration with Saavn Media Pvt Ltd at USD 670 Mn for growth
and expansion of the platform into one of the largest streaming
services in the world with global reach, cross border content,
independent artist marketplace, consolidated data and one of the
largest mobile advertising mediums.
• Tata Teleservices Maharashtra ltd and IDFC PE Fund’s sale of stake
in ATC Telecom Infrastructure Pvt Ltd to its majority shareholder
ATC for USD 400 Mn by exercising their put option.
Outlook
The liberal and reformist policies of the Government of India has been crucial to the sector’s development. The National Digital Communications
Policy 2018 has envisaged attracting investments worth USD 100 billion in the telecommunications sector by the year 2022. The deregulation of the
FDI norms may aggravate pressure on a highly competitive market with high spectrum costs and aggressive pricing. Theses factors are likely to
increase consolidation activity going forward.
6,929
417
3
2
-
1
1
2
2
3
3
4
-
2,000
4,000
6,000
8,000
H1 2018 H2 2018
USDMn
Value Volume

13
Information technology
Summary
• Information technology sector primarily includes software &
services, and technology hardware & equipment businesses.
• Acquisition of Intelenet Global Services’ BPO business by
Teleperformance (France) for USD 1 Bn providing an exit to
Blackstone.
• Merger of Birlasoft India with KPIT Technologies was valued at
USD 700 Mn, whereby the combined entity will later be split into
two companies with one entity focusing on automotive engineering
& mobility solutions and the other on enterprise digital business.
• HCL Technologies Ltd’s acquisition of software products from IBM
valued at USD 1.8 Bn, making it HCL’s biggest bet as a part of
building its software product business.
Further, cross border activity was on a rise during the year contributing
USD 4.7 Bn to the total deal value in 2018.
Outlook
India is the topmost offshore destination for IT companies and the global outsourcing market in India continues to grow at a higher pace. The
government has extended tax holidays to the IT sector for Software Technology Parks of India (STPI), Special Economic Zones (SEZs) and startups
and is also providing procedural ease and single window clearance for setting up facilities. The SMAC (Social, Mobile, Analytics and Cloud)
segment has become the new flavor of IT service companies and deal activity is expected to remain strong as these technologies persuade
organizations to build and deploy integrated solutions. By amending the MSIPS scheme, the Union Cabinet has incentivized investments in the
electronic goods sector with an aim to reduce dependence on imports by 2020.
4,015
2,256
62
44
-
10
20
30
40
50
60
70
-
1,000
2,000
3,000
4,000
5,000
H1 2018 H2 2018
USDMn
Value Volume

14
Energy
Summary
• Energy sector primarily comprises of oil & gas and energy
equipments & services business.
Key deals
• M&A activity in the energy sector during 2018 was sluggish. The
high value in H1 2018 was a result of a single mega deal with no
large deal in H2 of 2018.
• One of the largest domestic deals in the oil & gas space includes the
acquisition of majority stake in HPCL by ONGC for USD 5.8 Bn,
making ONGC India’s first vertically integrated oil major with
presence across the entire value chain. The integrated business will
result in economies of scale and increase risk appetite to withstand
global oil market volatility. While ONGC is engaged in the
exploration and production of oil & gas, HPCL is engaged in
refining and marketing operations.
• Reliance Industries sold a part of its Eagle Ford shale assets to
Sundance Energy for USD 100 Mn. The sale was in conjunction with
the sale of assets by other interest owners in the joint development
with Reliance.
Outlook
India’s economic growth is closely related to energy demand; therefore the need for oil & gas is projected to grow more, thereby making the sector
conducive for investment. With government’s ambitious green energy targets, the sector has become quite attractive for both foreign and domestic
investors supported by initiatives to boost the renewable energy sector, like the hydropower policy 2018-28, cleaner coal utilization plan, duty
benefits, etc. Further, the government is planning a major gas pricing reform by permitting trading of all domestic supply on local exchange, which
would help discover market price for gas locally and would help attract more investment in the sector.
5,878
0
4
1
-
1
2
3
4
5
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
H1 2018 H2 2018
USDMn
Value Volume

15
Consumer staples
Summary
• Consumer staples comprises of food & beverages, household &
personal products, and food and staples retailing business.
• Wilmar Sugar Holdings (Singapore) increased stake in Shree Renuka
Sugars by 17.38% for USD 95 Mn as part of a debt restructuring
program approved by the lenders of Shree Renuka Sugars.
• HUL acquired GSK Consumer Healthcare Ltd for USD 4.5 Bn that
will consolidate HUL’s position as India’s largest FMCG company
with addition of health drinks products to its portfolio. As a part of
the deal, the mainstays of GSK including Boost, Horlicks and
Maltova shall move to HUL’s kitty.
• Zydus Wellness announced the acquisition of Heinz India Pvt Ltd
jointly with Cadila Healthcare Ltd for USD 625 Mn bringing in
brands like Complan, Glucon D, Nycil and Sampriti Ghee to its
basket including complementary distribution capabilities.
Outlook
Of the overall retail industry, food and grocery accounts for the largest share in revenue in India. India is the world’s second-largest producer of food
and its contribution to global consumption is only expected to increase. The Indian Government has recently approved 100% FDI in single brand
retail, while FDI in multi brand retail is capped at 51%, which is likely to intensify competition. India has replaced China as the most favorable
market for retail expansion, supported by a fast-growing economy, increasing consumption rates, rising urban population and a burgeoning middle
class. Further, the evolving preference for organic/natural products coupled with increasing focus on fitness and well being is likely to steer deal
activity in this niche segment.
236
5,203
12
7
-
2
4
6
8
10
12
14
-
1,000
2,000
3,000
4,000
5,000
6,000
H1 2018 H2 2018
USDMn
Value Volume

16
Industrials
Summary
• Industrials includes capital goods, transportation and commercial &
professional services business.
• L&T divested its electric and automation business to French
automation giant Schneider Electric for USD 2.1 Bn with a view to
exit non-core business, unlock value within the existing portfolio and
to streamline and allocate capital and management focus.
• Adani Ports’ acquisition of Kattupalli Port from L&T for USD 277
Mn would give Adani Ports a major presence in the highly
industrialized region of south-east India.
• Volcan Investments Plc, that held 67% in London listed Vedanta
Resources Plc bought out the remaining stake for USD 1.03 Bn with
the view to take the company private to simplify the group structure.
This decision was taken amidst scrutiny against the company for
allegedly flouting environmental norms in its units in India.
• A booming electric vehicle market in India has caught the eye of
local companies. Megha Engineering and Infrastructure Ltd, one of
India’s biggest construction companies, acquired a controlling stake
in electric bus maker Olectra Greentech for USD 166 Mn.
Outlook
The engineering sector in India attracts immense interest from foreign players as it enjoys a comparative advantage in terms of manufacturing costs,
technology and innovation. The above, coupled with favourable regulatory policies and growth has enabled several foreign players to invest in India.
The sector has been delicensed and enjoys 100% FDI with an increased budget allocation and a focus on Make in India. Further, capacity creation in
other sectors such as infrastructure, power, steel, automotive and consumer durables is driving demand in the engineering sector.
2,812
1,650
33
34
33
33
34
34
35
-
500
1,000
1,500
2,000
2,500
3,000
H1 2018 H2 2018
USDMn
Value Volume

17
Utilities
Summary
• This sector primarily comprises of electricity, water and power
utilities.
• ReNew Power acquired Ostro Energy for USD 1.7 Bn, KCT
Renewable Energy for USD 175 Mn, Waaneep Solar for USD 92 Mn
and Rajasthan wind project of India Power Corporation for USD 10
Mn. These strategic acquisitions are seen to help ReNew Power
consolidate its position further in the fast-growing clean energy
sector in India.
• Greenko Energy’s acquisition of Orange Renewable for USD 850
Mn and Skeiron Green Pvt Ltd for USD 530 Mn added an
incremental 1.13 GW of wind and solar assets to its portfolio, and
will drive capacity, EBITDA and revenue growth for Greenko.
• Singapore based Agritrade Resources Ltd acquired SKS Power
Generation from SKS Ispat and Power Ltd in a one time settlement
with its lenders for USD 299 Mn.
Outlook
Renewable energy is fast emerging as a major source of power in India. The government is looking at increasing growth avenues in the power
segment, driven by the target to achieve renewable installed capacity of 175 GW by FY22. The Government of India invited bids for the largest
manufacturing linked solar tender in the world, for installing 20 GW of solar power capacity, to give a boost to manufacturing of solar power
equipment in India. This however got a tepid response in the first round because of the aggressive timelines and huge capital expenditure involved.
Further, with the approval of the National Policy on Biofuels, 2018, the expected benefits include cleaner environment, employment generation and
reduced import dependency, boost to infrastructure investment in rural areas and additional income to farmers.
3,087
961
13 9
-
2
4
6
8
10
12
14
-
500
1,000
1,500
2,000
2,500
3,000
3,500
H1 2018 H2 2018
USDMn
Value Volume

18
Healthcare
Summary
• This sector includes health care equipment & services and
pharmaceuticals, biotechnology and life sciences.
• Malaysia’s IHH Healthcare completed acquisition of controlling
stake in cash strapped Fortis Healthcare, one of India’s leading
healthcare service providers, for USD 1.1 Bn marking it as a
transformational investment by IHH to expand its footprint in India.
• Aurobindo Pharma made a series of acquisitions outside India during
the year. The major deal was the acquisition of the dermatology and
oral solids business of Sandoz Inc for USD 1 Bn, as part of its
strategy to expand and diversify in the US market, making it the
second largest dermatology player and generics company in the US.
• P&G acquired majority stake in German drug maker Merck’s Indian
unit for USD 295 Mn with a view to expand P&G’s consumer
healthcare business by adding a portfolio of OTC brands to its
existing brands. For Merck, it was a strategic divestment to help
finance R&D activities and also to deleverage.
Outlook
India is the largest provider for generic drugs globally. The Pharma Vision 2020 by the Department of Pharmaceuticals aims to make India a global
leader in end-to-end drug manufacturing. Indian pharmaceutical industry enjoys the advantages of low cost of production and increased investment on
R&D, which has contributed to higher pharma exports. Further, the government increased its focus on healthcare by launching Ayushman Bharat,
world’s largest government funded healthcare scheme, in Sep-2018. India has also become one of the leading destinations for high-end diagnostic
services with increasing capital investment for advanced diagnostic facilities.
401
3,227
13
24
-
5
10
15
20
25
30
-
500
1,000
1,500
2,000
2,500
3,000
3,500
H1 2018 H2 2018
USDMn
Value Volume

19
Financials
Summary
• Financials include banking, insurance, real estate and other
diversified financial services.
• IDFC Bank acquired Capital First for USD 1.5 Bn pursuant to IDFC
Bank’s strategy of retailising its loan book and transforming itself
from a dedicated infrastructure financer to a diversified bank.
• Singapore based Mapletree Investment Pte Ltd bought out securities
of Faery Estate Pvt Ltd from SPREP, owner of SP Infocity in
Chennai for USD 236 Mn with a view to strengthen its presence in
India and diversify its investment property portfolio across Asia.
• Belgium’s Ageas Insurance International agreed to acquire 40%
stake in Royal Sundaram General Insurance Co Ltd for USD 209 Mn
as part of its strategy of expanding in fast growing markets by
focusing on non-life insurance.
Outlook
Banking and NBFC segment will continue to see consolidation activity along with focus on recapitalization of PSU banks. The sector is also
expected to see greater innovations and newer business models that will boost digital payment solutions, thereby providing further momentum to deal
activity.
Future looks promising for the insurance industry with several changes in the regulatory framework. The National Health Protection Scheme under
Ayushman Bharat was launched, which aims to cover more than 100 million vulnerable families. Demographic factors such as growing middle class,
young insurable population, growing awareness of the need for protection, and retirement planning will support growth in the insurance sector.
Government’s focus on housing for all and successful measures to increase transparency and return after a successful implementation of RERA will
provide a boost to the real estate sector and attract higher investments.
2,117
635
44
21
-
10
20
30
40
50
-
500
1,000
1,500
2,000
2,500
H1 2018 H2 2018
USDMn
Value Volume

20
A. Glossary
Bn Billion
BPO Business Process Outsourcing
Cr Crores
DTH Direct-To-Home
EBITDA
Earning Before Interest, Tax, Depreciation and
Ammortization
ECB External Commercial Borrowing
FDI Foreign Direct Investment
FMCG Fast Moving Consumer Goods
FPIs Foreign Portfolio Investors
GDP Gross Domestic Product
GST Goods and Service Tax
GVA Gross Value Added
H1 2018 Jan'18 - Jun'18
H2 2018 Jul'18 - Dec'18
IBC Insolvency and Bankruptcy Code
IIP Index of Industrial Production
IPO Initial Public Offer
IT Information Technology
Appendices
LTCG Long Term Capital Gains
Mn Million
MSIPS Modified Special Incentive Package Scheme
NBFC Non Banking Finance Company
NCLT National Company Law Tribunal
NPA Non Performing Assets
PE Private Equity
PMI Purchase Manager's Index
PSUs Public Sector Undertakings
R&D Research and Development
RBI Reserve Bank of India
RERA Real Estate (Regulation and Development) Act
SEZs Special Economic Zones
SMAC Social, Mobile, Analytics and Cloud
STPI Software Technology Parks of India
USD US Dollar
VC Venture Capital
WPI Wholesale Price Index

21
B. References
Appendices
Data sources
• M&A deal data – VCC (Venture Capital Circle) Edge Database
• GDP annual growth rate – Investing.com
• FDI equity inflows – Department of Industrial Policy & Promotion
• PMI – Tradingeconomics.com
• IIP – Ministry of Statistics and Programme Implementation
• Foreign exchange rate – Reserve Bank of India
• WPI – Department of Industrial Policy & Promotion
Other references
• India Brand Equity Foundation
• Livemint
• Economic Times
• Financial Express
• Indiretailing.com
• Maxminindia.com
• Moneycontrol.com
• Business Standard
• India Today
• VCC
• Firstpost

22
C. Disclaimer
Appendices
VCC database captures details of the deals announced based on the
information available in the public domain. The deal data is compiled for the
period 1 Jan 2018 to 31 Dec 2018. However, deals with undisclosed values
have been ignored for the purposes of this analysis.
Publicly available economic, industrial, statistical and sectoral information as
well as outlook have been obtained from the sources mentioned in Appendix
B. We make no representation as to the accuracy or completeness of such
information.
Views expressed in this document are solely based on the information and data
points as referred to in Appendix B. The views may differ depending upon
changes in facts, circumstances and regulatory provisions.
Readers may or may not fully subscribe to the views expressed in this
document. We do not take any responsibility for decisions taken by the readers
based on this information. Further, this document should not be relied upon as
a substitute to detailed advice.
The contents of this document do not necessarily reflect the views of K C
Mehta & Co. but remain solely those of the authors.
Authors
Chinmay Naik Sanjana Shah
Associate Director Assistant Manager

KCM M&A Dealscape 2018

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