india going global.indd - The IIPM Think Tank

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RESEARCH WORLDWIDE MERGERS & ACQUISITIONS YTD 2007 YTD 2006 Full Year 2006 Macro Industry Value Deals Value Deals % Change Value Deals ($bn) ($bn) (YoY) ($bn) Financials (Private Equity) 44.7 97 22.0 94 103.3 46.8 235 Financials 474.1 1,686 166.1 1,532 185.5 568.7 4,360 Private Equity % of Total 9.4 13.2 8.2 Energy and Power (Private Equity) 53.4 53 5.0 48 974.6 53.9 152 Energy and Power 304.1 1,060 171.5 996 77.3 527.1 2,738 Private Equity % of Total 17.5 2.9 10.2 Industrials (Private Equity) 39.0 209 48.3 206 -19.3 88.8 577 Industrials 259.9 1,850 109.7 1,862 136.9 257.1 4,860 Private Equity % of Total 15.0 44.0 34.5 Materials (Private Equity) 16.8 99 7.4 107 126.9 31.5 299 Materials 183.5 1,806 148.6 1,474 23.5 380.3 4,181 Private Equity % of Total 9.2 5.0 8.3 Real Estate (Private Equity) 24.5 40 17.4 38 40.8 95.2 101 Real Estate 172.7 792 75.0 715 130.2 360.4 2,159 Private Equity % of Total 14.2 23.2 26.4 Consumer Staples (Private Equity) 36.2 102 3.6 84 905.0 12.7 227 Consumer Staples 152.3 905 36.7 953 315.2 121.8 2,370 Private Equity % of Total 23.8 9.8 10.5 Healthcare (Private Equity) 45.0 83 12.2 76 268.8 77.1 208 Healthcare 146.0 706 76.3 770 91.4 270.2 2,114 Private Equity % of Total 30.8 16.0 28.5 Media and Entertainment (Private Equity) 42.5 127 28.5 125 49.0 162.0 332 Media and Entertainment 140.0 1,153 94.3 1,125 48.5 358.9 3,110 Private Equity % of Total 30.4 30.3 45.1 High Technology (Private Equity) 65.3 155 15.6 164 318.5 58.2 393 High Technology 136.8 1,988 55.0 1,966 148.7 201.9 5,148 Private Equity % of Total 47.7 28.4 28.8 Telecommunications (Private Equity) 40.1 35 3.5 29 1,056.1 9.1 72 Telecommunications 107.7 394 200.8 440 -46.4 300.7 1,054 Private Equity % of Total 37.3 1.7 3.0 Consumer Products (Private Equity) 21.4 149 7.5 166 185.8 41.8 459 Consumer Products 53.8 1,401 32.7 1,435 64.5 105.6 3,861 Private Equity % of Total 39.8 22.9 39.6 Retail (Private Equity) 18.5 88 37.3 81 -50.4 72.8 236 Retail 48.3 681 64.7 615 -25.4 147.1 1,842 Private Equity % of Total 38.3 57.7 49.5 Worldwide Industry Total (Private Equity) 447.4 1,238 208.2 1,218 114.8 750.0 3,293 Worldwide Industry Total 2,179.3 14,433 1,231.6 13,900 77.0 3,600.7 37,839 Private Equity % of Total 20.5 16.9 20.8 72 Need the Dough July-October - 2007
MERGERS & ACQUISITIONS ber 2006, Qantas Airways in Australia agreed to an $8.7 billion buyout by Texas Pacific Group (TPG) and Macquarie Bank. Private Equity growth supports M&A market, why Increased public profi le of private equity and continuation of club deals In light of the total amount of capital invested by private equity fi rms and record-breaking LBO sizes in 2006, the industry has fi rmly established itself as a major player in the global M&A market and private equity fi rms are among the most sought-after suitors for companies seeking to engage in a business combination transaction. According to Buyouts, 54 companies were successfully delisted from public exchanges in 2006, up from 38 in 2005 and 32 in 2004. This greater public profi le has resulted in some resistance to financial sponsor investments in certain jurisdictions. For example, notable opposition has been voiced by public investors, regulators and industry players in Germany, Korea and Australia. In response to the increasing number of private equity transactions, the UK’s Financial Services Authority undertook a study of the risks posed by such transactions and the potential need for increased regulation. The study concluded that private equity transactions posed no systemic risk and that private equity made a significant contribution to improving company competitiveness. invest in even larger transactions involving household name companies and to sustain high levels of private equity activity. These types of high-profi le deals, together with sustained high levels of fi nancial sponsor activity, will contribute to increased public awareness of financial sponsors and the influence of private equity capital. It remains to be seen whether LBOs will constitute a similarly significant percentage of global M&A activity in 2007 as in 2006. Private equity firms will need to continue investing the large amounts of equity capital rose over the past several years and, ultimately, will begin to pursue various exit strategies from their portfolio investments, including initial public offerings, sales to strategic buyers or sales to other private equity firms. As a result, it is anticipated that private equity transactions will be important drivers of overall M&A activity and continue to have a significant impact on the global economy. Globalization is causing many boards to consider over- seas strategies: China, in particular, is seen as a huge potential source of revenue, especially for technology companies. Many companies now feel they need an emerging markets play and are keen to acquire the best businesses, regardless of where they are located. Synergies continue to be a driving force for deals. Diverse target industries: In the past year private equity transactions involved target companies in a wide range of industries. Traditionally, private equity firms have concentrated heavily in the manufacturing, distribution and services industries, each of which have historically generated target companies with steady cash flows. However, fi nancial sponsors are branching out into a variety of other industries, as their expertise, investment scope and available capital expand. Abundance of equity capital and debt financing: Private equity funds continued to set record fundraising levels in 2006. Private equity funds raised $406 billion last year, with 612 new funds launched, which exceeded the previous record of $311 billion set in 2005. Lenders have been provided more flexible debt structures to fi nancial sponsors to fi nance LBOs. The robust debt markets and abundance of equity capital were significant factors in the LBO surge in 2006, and it is likely that a continuation of favorable debt markets this year, combined with private equity’s significant cache of equity capital, will allow fi nancial sponsors to Particularly in the rapidly evolving TMT sector, where the markets for traditional providers and newer, Web-based technologies are converging, the idea that the best of both worlds can combine to create more productive and efficient entities is being more readily recognized. Buyout Boom Not Just for Biggest Firms: Buyout Boom Not Just for Biggest Firms: Private equity’s ongoing zeal for the middle market has many boards contemplating what they need to do to spark interest in their company. To no one’s sur- July-October - 2007 Need the Dough 73
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IIPM Planman Hyderabad Campus New D
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M A K E W E A L T H W H I L E O T H
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Editor’s Page Dear reader, Prasoo
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PANORAMA A“M&A”ZING INDIA 8
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PANORAMA The year gone by has seen
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PANORAMA MERGERS AND ACQUISITIONS :
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PANORAMA the Public Announcement, i
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PANORAMA DERIVATIVES A Critical Ass
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PANORAMA Competitive impact: This f
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GLOBAL PERSPECTIVE A BIG RICH INDIA
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