April saw 46 per cent increase in deal values in private equity, while volumes remained muted, according to the findings by Grant Thornton's Monthly PE Dealtracker. (Representational Image)

New Delhi: Merger and acquisition and private equity deal values witnessed 79 per cent drop in April despite easing of Indo-Pakistan tensions, strengthening of rupee against dollar and encouraging domestic sentiment on the back of easing inflation, says a report.

Total merger and acquisition (M&A) and private equity (PE) deal value was at USD 4,579 million (about Rs 31,950 crore) in April 2019 against USD 21,766 million in the same month last year, as per a report by Grant Thornton released on Wednesday.

The report further said despite 96 per cent fall in M&A deal value in April compared to same month last year, PE investors did not fail to impress with increased investment activity recording one billion-dollar investment and nine investments valued over USD 100 million each.

Total M&A value in April was USD 735 million against USD 19,142 million in the same month a year ago.

April saw 46 per cent increase in deal values in private equity, while volumes remained muted, according to the findings by Grant Thornton's Monthly PE Dealtracker.

"Despite easing of Indo-Pakistan tensions, strengthening of rupee against dollar and encouraging domestic sentiment on the back of easing inflation and, as a result, giving rise to expectation of lower interest rates, April 2019 witnessed 79 per cent drop in the M&A and PE deal values," the report noted.

The deal value for private equity was at USD 3,844 million in April this year as compared to USD 2,624 million last year.

"As anticipated, the deal turnout remained suppressed in April 2019. About 35 M&A transactions and 80 PE/VC transactions aggregated to USD 0.7 billion and USD 3.8 billion, respectively in April 2019.

"Compared to overall deal statistics of April 2018, deal values shrunk by 79 per cent and volumes by 6 per cent," said Pankaj Chopda, Director, Grant Thornton India LLP.

Compared to March 2019, April recorded 18 per cent rise in deal volumes while values declined 32 per cent, the report said.

Volumewise, there were a total of 115 M&A and PE deals, a fall of 6 per cent against 122 in April 2018.

So far this year, PE deal values recorded a significant 74 per cent increase despite 10 per cent drop in investment volumes, indicating increased average deal size.

Despite muted volumes, large ticket PE/VC transactions partially offset the shortfall in overall deal values. A USD 1.1 billion investment by Tata Group, GIC and SSG Capital Management was the major contributor to the 46 per cent growth in PE/VC transaction values as compared to April 2018, the report added.

Infrastructure management, retail and consumer and banking and financial services were the key drivers for PE/VC transactions, Chopda said.

Considering May being the month of election results, the uncertainty in deal landscape is expected to soon fade away. However, transactions to pare debt, closure of IBC related transactions and transactions in pipeline indicate a silver lining for the rest of the year, Chopda added.

Driven by GMR Airport's funding, the biggest PE deal in India's airport sector in both rupee and dollar terms, the infra sector topped the value chart with this deal alone capturing 30 per cent of the total PE deal values. The startup sector accounted for almost half of the PE investment volumes.