According to India Technology Product M&A Industry Monitor report released by iSpirt, Signal Hill and Microsoft Ventures, there have been around 190 M&As deals with a total estimated transaction value of $2.27 billion in India since January 2011. Domestic transactions accounts a majority of 72% of the M&A activity by volume.
Out of the total 190 deals, 36% was occurred in Internet & Consumer space, 29% accounted for B2B Software, while the remaining 35% held by eCommerce (14%), Mobile (14%) and Ad-tech & Marketing Automation (7%) respectively.
However, due to a higher average deal size, 53 ‘inbound’ M&A transactions account for about 50% ($21.1M vs $8.4M) of the estimated transaction value. The average deal size in the country stands at $11.3 million, much lower than countries like Israel ($113M) and the US ($57M).
VC/PE investments in the eCommerce and consumer internet markets have grown 38 times from 2010-2014. With 61 M&A transactions, a sum of $4.2 billion (60% of total) was invested in E-Commerce/Consumer Internet space including 6 companies – Flipkart ($1,910M), Snapdeal ($1,111M), Ola ($652M), Quikr ($300M), Housing.com ($123M), and FreeCharge ($113M) alone in 2014 to Q1,2015.
The hedge funds & private equity funds are investing in ‘new’ Series B ($10-25M) and Series C & D ($20-250M) onwards, fueling a frenzy in valuations.
The report indicates that there are 300M+ internet users at present and 15-20M users transacting online. It also makes the following predictions for 2015:
1. The large Indian “Unicorns” will aggressively make strategic acquisitions to enhance market dominance and strengthen strategic growth areas include Mobile, Big Data / Analytics, Payments, AdTech, etc.
2. Technology Product M&A volumes and values will continue to increase rapidly. In B2B Software cross-border M&A will continue to dominate transaction volumes & values whereas in E-Commerce and Internet & Consumer domestic M&A transactions will continue to dominate.
3. Significant VC/PE funds will continue to flow into E-Commerce and Consumer Internet sectors, as new alternative investors continue to enter the market.
4. Internet of Things [IOT] will receive significant interest from VCs and large acquirers: sectors include healthcare, enterprise, wearables and industries
5. Acqui-Hires will continue to be a critical component for US and India companies: areas include iOS, Android engineers and Machine Learning/Data Science experts
To check the full report, click here.