PE-VC Society

presents

Mergers & Acquisitions 101

September 3, 2019
What is M&A?
Where do I fit in the process?
WHAT IS MERGER & ACQUISITIONS?
A merger and acquisition transaction comprises of the traditional corporate mergers, acquisitions and divestitures as
well as debt and equity financing. The various activities performed during the process of an M&A are as mentioned
below –
KEY TYPES OF DUE DILIGENCE
WHAT ARE CARVE OUTS AND DIVESTITURES?
A carve-out is the partial divestiture of a
A divestiture is the disposition or sale of an asset
business unit in which a parent company sells
by a company. As companies grow, they may find
minority interest of a child company to outside
they are trying to focus on too many lines of
investors.
business, and they must close some operational
units to focus on more profitable lines. A company undertaking a carve-out is not selling
a business unit outright but, instead, is selling an
Companies may also sell off business lines if they
equity stake in that business or spinning the
are under financial duress. Divested business units
business off on its own while retaining an equity
may be spun off into their own companies rather
stake. A carve-out allows a company to capitalize
than closed in bankruptcy or a similar outcome.
on a business segment that may not be part of
By divesting some of its assets, a company may be its core operations.
able to cut down on its costs, repay its outstanding
In a carve-out, the new organization has its own
debt, reinvest, and focus on its core business(es)
board of directors and financial statements.
and streamline its operations. This, in turn, can
However, the parent company usually retains a
enhance shareholder value. This is especially
controlling interest in the new company and
important when there is volatility in the markets or
offers strategic support and resources to help
if the company experiences unstable conditions.
the business succeed.
BUY AND SELL SIDE
This is the major focus of Investment Bankers in the M&A space. Sell-side firms are firms looking to pitch and sell assets or
opportunities while Buy-side firms are firms with capital, looking to buy assets or opportunities. Investment bankers can
be advisors on either of these sides and their roles change accordingly.
Key tasks performed by a sell side investment banker
Key tasks performed by a buy side investment banker
The M&A scenario in India
2018 – RECORD YEAR FOR M&A IN INDIA
• M&A activity doubled from ~$60bn in 2017 to $129bn
in 2018, with average deal size rising to $128mn. Both
domestic and cross border M&A activity doubled over
the year. Deal count grew by ~18% in 2018 vis-à-vis
2017.
• Top 3 sectors dominating M&A activity in India are
retail, materials and healthcare.
• Private Equity backed deals also grew 73%, as they
invested in the retail and healthcare sector.
• Financial investors continue to remain interested in the
India, as their sectors of interest expanded from energy
and real estate to include healthcare and ecommerce.
• M&A activity was also aided by the sale of stressed
assets under the Insolvency and Bankruptcy Court. This
trend is expected to continue as RBI pushed banks to
clear bad loans from their books.
• Inbound M&A activity accounted for over 30% total
deal value in 2018, rising 6 times against 2017.
• Some deals have been driven by the need for
consolidation in industries like steel, telecom and oil
and gas.
M&A
drivers
Stressed PE Strategic
assets Consolidation
interest Capabilities
FINANCIAL VS STRATEGIC BUYER
• PE, VC and Sovereign Wealth Funds have invested in
financial services, renewable energy, real estate and
infrastructure, retail and healthcare businesses.
• Financial investors in India increasingly look for a
control stake in private companies, driven by larger
fund sizes, desire to control strategy and exit timing
and inability of promoters to raise funds due to
stressed financial sector.
• Strategic M&A activity, be it inbound or domestic, has
been driven by increasing consolidation and
deleveraging in stressed sectors.
• Major sector witnessing strategic acquisitions are steel,
telecom, real estate and financial services.
• In-bound acquisitions have been primarily from the
United States, Japan and Singapore.
M&A deals to know
MAJOR DEALS THAT MADE NEWS IN 2019
Investor
Hot
Target Acquirer IB/PE/VC Amount Sector Overview More Details
Topic
Merger

Goldman Walmart’s entry in India against Amazon with the largest

Flipkart Walmart $16 Bn Retail https://bit.ly/2kNe1p4
Sachs investment by a foreign co. in India

This acquisition will help Reliance Brands to expand its

Hamley’s Reliance 620 Cr. Consumer https://bit.ly/2kzGOxy
footprint internationally.
The acquisition is in line with OYO's continued commitment
to the company's global vacation rentals business through
Danamica OYO $10 million TMT https://bit.ly/2mtVrTB
strategic investments in technology products, processes, and
people.

Essel Solar Adani Green The deal is part of a divestment process by Essel group as it
$ 181 Mn Infrastructure https://bit.ly/2kNwDpg
Assets Enregy tries to lower its debt burden

Mindtree L&T Avendus 10,773 Cr. IT L&T’s hostile takeover of Mindtree by buying 60% stake https://bit.ly/2lTXEY8

The six merged banks (including SBI and Bank of Baroda)

10 State run
4 PSB Finance now command 82% of the business with state-run lenders https://bit.ly/2Ug5ngm
banks and 56% of the commercial banking business

Rs 1,500- Education,
EuroKids KKR Avendus Largest FDI investment in Education sector in India https://bit.ly/2kZn46t
2,000 crore FDI
MAJOR DEALS THAT MADE NEWS IN 2019
Investor
Hot
Target Acquirer IB/PE/VC Amount Sector Overview More Details
Topic
Merger
India’s top growing fintech company intends to use
$ 300
Zeta Sodexo Avendus Technology this new capital to expand its business in the US, UK, https://bit.ly/2m8rE2o
million
Europe & Southeast Asia
Bought Had been a considerable interest in the bank’s
stake Finance, performance from foreign investors after it was
RBL Bank BlackRock Undisclosed https://bit.ly/2kWssY7
from Gaja Banking included in the London-based FTSE emerging market
Capital mid-cap index. Gaja made ~9x returns on stake sell.

Startup, BlackRock making its return to the Indian startup

GoWork BlackRock - Rs 375 crore https://bit.ly/2kWIP6U
Real Estate ecosystem after more than five years.

Saudi Basic $ 69.1 Bn

Aramco aims to increase its refining capacity from
Industries 70% stake
Saudi Aramco Citibank Oil 4.9M barrels per day to https://bit.ly/2kZavYP
Corporation from Public
8M – 10M bpd
(SABIC) Inv. Fund
$39 billion Sky has 23M subscribers with increased presence in https://cnb.cx/2xxCWA
Sky Comcast Citibank Broadcasting
takeover OTT and streaming q

Goldman $ 15.7 The largest acquisition ever for any cloud software
Tableau Salesforce Tech https://cnb.cx/2mvZgrt
Sachs Billion company
MAJOR DEALS THAT MADE NEWS IN 2019
Investor
Hot
Target Acquirer IB/PE/VC Amount Sector Overview More Details
Topic
Merger
Considering the ongoing industry shift to laminated tubes;
Morgan $310 mn - Blackstone will benefit from Essel Propack’s leadership in
Essel Propack Blackstone Manufacturing fast-growing categories such as beauty, cosmetics and
https://bit.ly/2n59UWx
Stanley $462 mn
pharmaceuticals.
The deal is the largest overseas acquisition by
ABB Power
Hitachi UBS $6.4bn Infrastructure Hitachi and makes it one of the largest players in the https://bit.ly/2mvFHQ9
Grid
power grid industry
Llyod Standard
Llyod acquisition by Havells is to bring long term
Consumer Havells Chartered 1,600 Cr. Consumer https://bit.ly/2kZAIXc
scalability to its consumer business
Durable Bank, EY
Deutsche
Bank,
The acquisition is Coca Cola’s attempt to diversify
Goldman
Costa Coffee Coca cola $5.1 bn Consumer into the coffee market as the market for cola drinks https://bit.ly/2kxJQSX
Sachs,
face a market-wide slowdown
Morgan
Stanley
India Bulls The deal by Blackstone is to expand their portfolios
Blackstone $616 mn Infrastructure https://bit.ly/2kXz6NO
real estate of commercial real estate in India
Saudi Aramco will also supply 5,00,000 barrels per
Saudi
Reliance - $75 Billion Oil day of crude oil on a long-term basis to RIL’s https://bit.ly/2m7gqvq
Aramco
Jamnagar Refinery
 Contributors:
Ayush Jain
THANK YOU! Deekshaa
Divya Singhvi
Zubin Sheth
 Contributors:
Ayush Jain
THANK YOU! Deekshaa
Divya Singhvi
Zubin Sheth