TREND FORECAST IN M&A: ERNST & YOUNG INDIA
- M&A activity is set to pick up through 2016. Domestic activity should strengthen, especially around debt consolidation and restructuring.
- The last year saw record PE/VC activity with 767 deals amounting to US$19.6 billion in investments – the highest annual value and volume of investments .
- Deal volume was up to 767 in 2015 from 469 in 2014.
- Deal value was up by a significant 68 per cent from 2104 and more than 10 per cent compared to the last record year of 2007.
- The year exhibited three discrete trends – marked improvement in big deals, substantial growth in early-stage activity and unprecedented interest in e-commerce and internet related businesses.
- Buyout deals also increased substantially from 8 worth US$513 million in 2014 to 23 worth US$2.8 billion.
- Similar to the previous year, 2015 also saw an increased focus of investors in the e-commerce and technology sectors (accounting for 331 deals worth US$6.1 billion).
- Fund raising was at a historic high – it was up by 78 per cent to US$6.4 billion from last year’s US$3.6 billion.
- The number of exits rose to 249, the highest ever recorded in a year. Value nearly doubled to US$ 6.5 billion in 2015 from US$ 3.4 billion from 166 exits in 2014.
M&A in the Beauty Space
According to a recent report released by KPMG, the beauty and wellness industry in India will be $13 billion by 2017. At the rate at which our industry players are racing ahead, it seems to be a possible target to achieve.
Beauty and personal care analyst at Euromonitor International, Nicholas Micallef, shares, “Current mergers and acquisition trends are driven by fast value creation by the purchase of niche and luxury brands.”
This perhaps explains the reasons behind VLCC acquiring international brands like Wyann International and GVig, from Malaysia and Singapore, respectively.
Managing Director and Group CEO, VLCC, Syed Safawi, says, “Our M&A strategy is geared towards value acquisitions across emerging economies. In the last few years, we have made two acquisitions in South Asia, GVig and Wyann International. We will continue to look at promising companies, both in India and abroad, as we expand our portfolio and geographical footprint. Above all,our M&A strategy is designed to seamlessly fit into our existing business model, rather than VLCC diversifying into varied domains.”
On the inspiration behind these acquisitions, Safawi says, “The acquisition of Wyann International, a slimming and beauty services provider, was VLCC’s first move to grow through acquisition. It was a springboard for us to achieve an accelerated expansion in South East Asia. The GVig acquisition was VLCC’s second and in consonance with our strategy to expand our presence in the wellness domain in key markets overseas. It helped us to gain access to the company’s R&D laboratory and manufacturing facility in Singapore, which enabled us to come up with cutting-edge wellness products and solutions at a faster pace.”
The two buyouts have, clearly, been an advantage for VLCC, as they have allowed them to get a foot into the growing international markets.
“In addition, we have gained access to international best practices and processes. We have gained from global expertise and insights, too. In turn, we have been able to add to the brand equity of a company that has been around for more than 25 years. The knowledge that exists within VLCC is of immense value to our international subsidiaries. Today, we are able to leverage global talent and learning across the spectrum,” says Safawi.
“THE ACQUISITION OF WYANN INTERNATIONAL AND GVIG HAS ENABLED US TO GROW. IT WAS A SPRINGBOARD FOR US TO ACHIEVE AN ACCELERATED EXPANSION IN SOUTH EAST ASIA. IN ADDITION, WE HAVE GAINED ACCESS TO INTERNATIONAL BEST PRACTICES AND PROCESSES.”
– Syed Safawi, MD and
Group CEO, VLCC
As one of the largest organised players in the beauty, wellness and skill development domains, VLCC functions, as an Indian multinational with centralised planning and strategy.