Overall deal activity in the January-March quarter witnessed an unprecedented three-fold year-on-year rise in value terms, driven solely by the Vodafone-Idea mega merger, which accounted for 80 per cent of the total values.
"The Indian deal activity was dominated by big-ticket mergers and acquisitions (M&As) this quarter. The quarter witnessed one of the largest deals in the country with Vodafone and Idea's merger, which is estimated at around USD 27 billion," Grant Thornton India LLP Partner Prashant Mehra said.
The January-March quarter recorded USD 33.7 billion across 300 deals marking a sharp increase in value as compared to USD 10.9 billion in the same period last year while volumes declined by 27 per cent.
Without the Vodafone-Idea mega merger, estimated to be a USD 27 billion transaction, the deal activity would have recorded 39 per cent decline in values, assurance, tax and advisory firm Grant Thornton said.
M&A market activity has so far been driven solely by the big-ticket deals, while on the other hand number of transactions continued to slip for the third straight quarter.
"Primary driver for M&A growth was consolidation in thedomestic market with deal values growing by 10 times on the back of healthy capital markets and easing credit conditions.
This enabled companies strike big ticket deals either to slash debt or consolidate market share," Mehra said.
Meanwhile, the cross-border deal activity is yet to pick up pace in 2017 as compared to previous quarters due to looming uncertainties in the global economy.
Going forward M&A activity this year is expected to stay positive owing to the sustained interest in Indian economy.
Mehra believes consolidation and expansion is set to be the major theme that will drive the deal activity, especially in healthcare, telecom, e-commerce and infrastructure sectors.
"In financial services sector, the possibility of new business models emerging post demonetisation, continued fund raising by NBFCs and a consolidation push by micro finance firms will play a big role," he added.