Dealtracker Providing M&A and Private EquityDealTracker Deal Insight Third Quarter, 2014 Volume 10.9 © Grant Thornton India LLP. All rights reserved. About Grant Thornton More than Total global revenues Member firm within 38,500 $4.5bn Grant Thornton people (2013) International Ranked among top 5 in 2,000 all major markets people including India based in over and over one of the largest 130 11 fully integrated countries Assurance, 700 cities Tax & Advisory offices firms in India Presence in 11 major cities of India – Ahmedabad, Delhi, Bengaluru, Chandigarh, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai, Noida and Pune © Grant Thornton India LLP. All rights reserved. Foreword Raja Lahiri Partner Grant Thornton India LLP We are pleased to present Grant Thornton Dealtracker Report for 3rd Quarter of In terms of sectors, we have seen M&A values driven by the Pharma sector 2014 (July – September, 2014) which captures deal data (value/volumes) along with deals such as Sun- Ranbaxy merger indicating the consolidation trend with related analysis. in the sector, and GlaxoSmithKline consolidating operations by hiking the stake in Indian subsidiary. Technology sector has been active both in M&A There has been clear upswing in the M&A and PE deal activity with US$36bn and PE. Key deals include Cognizant acquiring US based Trizetto for worth of deals in the nine month period ending September 2014, the best we US$2.7 bn, Flipkart-Myntra acquisition for US $ 340mn. PE investment have seen since 2012. It is noteworthy to mention here that we have seen an continues to be driven by the e-commerce sector led by the billion dollar increase across segments from domestic, inbound, outbound to Private Equity in investment into Flipkart. both values and volumes. This clearly implies a revival in business sentiments and investment climate. Sectors which are expected to see renewed deal activity include infrastructure, energy, consumer and financial services. We expect While the year began on a rather cautionary note, the deal pace started picking up valuations to go up given the renewed business sentiments which in our in the months closer to the Elections and the momentum kept increasing view, would be both a challenge and an opportunity for dealmakers to close thereafter, signalling positive vibes for the months and quarters to come. deals in the coming quarters. Clear deal drivers have been the domestic and inbound space with 70% higher We believe that this momentum of deal activity will continue to increase inbound values and more than twice the domestic deal values seen in 2013. and we look forward to closing the year on a high note. Moreover, with close to a 40% increase in investment volumes over 2013, private equity deals have contributed 50% of total deal volumes in 2014 driven by the Happy Dealmaking! technology sector. © Grant Thornton India LLP. All rights reserved. 3 Dealscape YTD 2014 Highlights Quarter 3, 2014 Deal Round-up Deals of the Quarter © Grant Thornton India LLP. All rights reserved. 4 Deal Round Up YTD 2014 Deal Summary- YTD Volume Value (USD mn) 2012 2013 2014 2012 2013 2014 • In YTD 2014, the overall deal activity stood at USD 36.2bn (886 deals), Domestic 177 166 194 4,431 4,319 9,717 significantly higher than the USD 29.7bn (694 deals) in 2013 and also Crossborder surpassing 2012 levels. 180 168 214 9,124 13,385 14,787 Merger & Internal • PE investment so far in 2014 is higher at USD 8.4bn against USD 7.8bn in Restructuring 79 38 33 14,614 4,264 3,313 2013, with 38% higher volumes in 2014 compared to 2013. Total M&A 436 372 441 28,168 21,969 27,817 • The M&A space has rebound in YTD 2014 as compared to the previous Private Equity 311 322 445 6,052 7,806 8,454 year, with 70% higher inbound values and more than twice the domestic Grand Total 747 694 886 34,220 29,775 36,271 Cross border includes deal values seen in 2013. Inbound 100 103 129 3,669 5,685 9,698 Outbound 80 65 85 5,455 7,700 5,089 Trend spotting Total Deal Value Spread (USD bn) – YTD'14 Total Deal Volume Spread – YTD'14 8.5 445 7.8 311 322 There is a continuous uptick in PE deal 6.1 values and volumes, with over 50% deal Private Equity volume from PE/VC investments 3.3 alone. 79 32 7514.6 38 255.1 Merger & Internal 85 4.3 M&A has rebound in 2014 driven by 30 Restructuring 80 65 75 7.7 72 Outbound 61 103 129 domestic and inbound deals both in 9.7 100 5.5 95 116 values and volumes 865.7 Inbound 3.7 166 9.7 177 195 4.4 4.3 Domestic 165 2012 151 2013 160 2014 2012 2013 2014 2012 2013 2014 © Grant Thornton India LLP. All rights reserved. 5 Deal Round Up YTD 2014 YTD 2014 Mergers & Acquisitions Media & Entertainment Others Deal Volume Deal Value (USD mn) Pharma, 4% 14% Healthcare & Sectors YTD 2012 YTD 2013 YTD 2014 H1 2012 H1 2013 H1 2014 Biotech Manufacturing Pharma, Healthcare & 19% 27 29 48 1835 2621 5387 5% Biotech 79 68 94 2706 890 5059 Real Estate IT & ITES IT & ITES 6% 34 26 32 1133 3454 3490 18% Retail & Consumer Telecom 9 7 10 1070 607 3297 Energy & Natural Retail & Energy & Natural 39 29 30 14245 6439 2547 Resources Telecom Consumer Resources 9% 12% 13% Real Estate 15 20 20 799 831 1695 Top Sectors based on Deal Value Media & Private Equity Transport & Entertainment Logistics 2% 2% others Manufacturing 8% 3% Deal Volume Deal Value (USD mn) Energy & Natural Resources IT & ITES 4% Sectors YTD 2012 YTD 2013 YTD 2014 YTD 2012 YTD 2013 YTD 2014 36% Retail & Consumer 6% IT & ITES 98 105 179 1870 1410 3105 Pharma, Healthcare Infrastructure Management 10 9 14 352 165 1127 & Biotech 8% Real Banking & Financial Services 36 32 33 537 901 896 Estate Infrastructure 8% Real Estate 18 23 29 469 686 695 Management 13% Pharma, Healthcare & Biotech 32 49 42 787 660 664 Banking & Financial Services Retail & Consumer 27 30 33 496 427 503 10% Top Sectors based on Deal Value © Grant Thornton India LLP. All rights reserved. 6 Deal Round Up Q3 2014 Deal Summary – Q3 Volume Value (USD mn) 2012 2013 2014 2012 2013 2014 Domestic 46 51 78 1,288 1,309 2,095 • Q3 2014 has been the best quarter in the last 3 years with an increase in Crossborder 56 55 81 4,011 4,922 8,393 volumes and values across domestic, cross-border and PE. Merger & Internal Restructuring 11 13 11 75 3,765 56 • Inbound activity in Q3'14 saw 8 deals valued at over a USD 100mn each, led Total M&A 113 119 170 5,373 9,996 10,544 by the USD1.9bn stake purchase of Diageo in United Spirits Private Equity 92 115 157 2,254 2,126 3,121 • Private equity witnessed a 47% increase in values led by the billion dollar Grand Total investment in Flipkart and 37% increase in volumes driven by the IT&ITES 205 234 327 7,628 12,121 13,665 Cross border includes sector with over 40% share in total deal volumes. Inbound 24 38 41 696 1,590 4,870 Outbound 32 17 40 3,315 3,331 3,523 Trend spotting Total Deal Value Spread (USD mn) – Q3'14 Total Deal Volume Spread – Q3'14 3,471 PE: Several big ticket deals in Q3'14. 159 2,254 15 investments over USD 50 mn each 2,126 92 115 including 2 over USD 100mn and one Private Equity billion dollar investment. Q3'2013 had 11 only 9 investments worth over USD 56 75 50mn each. 25 Merger & Internal 40 3,765 3,523 Restructuring 11 13 30 75 72 61 Outbound 17 M&A activity saw increase across all 75 32 41 3,331 38 segments, with inbound driving values 95 86 116 Inbound 3,315 4,870 24 and domestic driving volumes 1,590 51 78 Domestic 46 696 165 1,288 151 1,309 160 2,095 2012 2013 2014 2012 2012 2013 2013 2014 2014 © Grant Thornton India LLP. All rights reserved. 7 Sector Round-up Q3 2014 M&A Q3 2014 By Value PE Q3 2014 By Value Media & Others Entertainment Others Pharma, Media & Banking & 6% 2% 7% Healthcare & Entertainment Financial Services Biotech 3% 2% 4% Pharma, Healthcare & Banking & Biotech Financial Services 6% 5% IT & ITES Retail & Manufacturing 36% Consumer 8% 6% IT & ITES 51% Energy & Natural Telecom Resources 10% Retail & 7% Consumer Real Estate 19% 9% Energy & Natural Resources Infrastructure 10% Management 9% M&A Q3 2014 By Volume PE Q3 2014 - By volume Others Media & Others Retail & 19% Entertainment IT & ITES 16% Consumer 4% 5% 26% Education 4% Banking & IT & ITES Financial Services Energy & Natural 42% 5% Manufacturing Resources 13% 5% Infrastructure Management Banking & 5% Financial Services 6% Energy & Natural Pharma, Retail & Media & Healthcare & Consumer Pharma, Resources Healthcare & 6% Entertainment Biotech 6% 9% 12% Biotech Real Estate 11% 6% © Grant Thornton India LLP. All rights reserved. 8 Deals of the Quarter M&A Diageo Plc picked up 26% of United PE Spirits Ltd stake from public US$ 1.9 shareholders raising its total stake to Flipkart raised USD 1bn in a fresh 54.78%. bn round of funding, led by existing investors along with other new US$ 1 investors bn Diageo Plc is a British multinational alcoholic beverages company headquartered in London, England.