Market Snapshots

Platform & Agencies Landscape

Email Subscription

Enter your email address to receive Signal Hill's latest news and research.

FOR MEDIA REQUESTS
AND OTHER QUERIES,
PLEASE CONTACT

Madeleine Desmond

iSPIRT and Signal Hill release the first India Technology Product M&A Industry Monitor Report

Published on: 06/27/2014

159 Technology Product M&A transactions with a total deal value of $1.78bn have been completed in India since January of 2010.

INDIA, Bangalore, June 25, 2014 – The Indian Software Products Industry Roundtable (iSPIRT) and Signal Hill, a Technology focused middle market advisory boutique, today announced the first release of the “India Technology Product M&A Industry Monitor Report”. Click here to access the report.

The iSPIRT M&A monitor shows that since 2010, there have been 159 M&A transactions involving Indian Technology Product companies, with a total estimated transaction value of $1.78B. Domestic transactions account for the lion share (70%) of the M&A activity by volume. However in value terms, the 48 inbound M&A transactions account for 63% of the estimated M&A transaction value, due to a higher average deal size ($23.3m versus $6.0m).

In particular, the B2B Software segment accounted for 56% of all inbound M&A transactions with foreign players (mostly US & European) acquiring Indian Software companies. On the flip side, Ecommerce & Internet segments (83% of all transactions by value) dominated domestic M&A, with Naspers’ acquisition of Redbus being the exception to the rule.

“In the Silicon Valley, technology M&A exits provide liquidity to all the stakeholders in the ecosystem and help drive the next generation of tech startups. For the Indian product eco-system to flourish, it is critical to us to drive up the level of Technology Product M&A transactions”, said Sanat Rao, who leads iSPIRT’s M&A Connect Program, an initiative dedicated to facilitating and expediting the cross-border M&A process for Indian software product companies.

Whilst it is encouraging to see the increasing trend in overall Technology Product M&A deal volumes and values in India, the Indian M&A eco-system is still in the early stages of its evolution compared to that of the US and Israel. For instance, VC/PEs investment in Israel from 2010-13 was half (~$1.5B) that of India (~$3B), but the total Technology Product M&A deal values in Israel during this period was more than 6 times the M&A transaction value seen in India, mainly driven by a much higher (~$100M versus ~$11M) average M&A transaction size in Israel.

“Obviously part of the reason for the gap in Indian M&A deal value is that only in recent years VC/PE investment levels in Indian Technology Product companies have started to pick-up rapidly. Hence a large portion of the VC/PE backed Technology Product companies in India are still part of a growing “inventory” of companies that is likely to reach the scale that will put them on the radar screen of strategic acquirers,” said Klaas Oskam, Managing Director & India Head of Signal Hill. This rapidly growing “inventory” of exit ready companies leads us to predict that Indian Technology Product M&A deal volumes and values are bound to increase significantly over the coming years.

The Indian Technology industry has over the past two decades been dominated by IT Services players. However, the last five years have seen a distinct increase in the number of technology entrepreneurs that have focused on building Technology Product (i.e. software, internet & ecommerce, mobile product etc.) based businesses from India. For instance, according to leading research and advisory firm Zinnov, there are more than 3,700 software product companies in India today addressing both the enterprise and consumer segments.

“Indian Technology Product M&A deal values are still low in comparison to Israel. Key reasons for this include: Israel has a more evolved M&A eco-system with many serial entrepreneurs who are better at spotting technology gaps, building a tech product company and preparing for M&A. Furthermore in comparison to Israel, Indian Technology Product companies continue to face a discovery problem amongst the global technology acquirers. It is these type of discovery issues that iSPIRT through its M&A connect program is starting to address”, said Sharad Sharma, Chairman of iSPIRT.

Details of the Technology Product M&A monitor are available at: http://productnation.in/action-plan-forincreasing- ma-opportunities-for-indian-product-startups/

About iSPIRT
iSPIRT Foundation connects and guides software product entrepreneurs and catalyzes business growth. It’s an enabler of a stronger ecosystem. We encourage buyers to improve performance by leveraging software products effectively. We advise policy makers on interventions that can set the industry on a higher growth trajectory. We are a not-for-profit industry think-tank founded by key participants and proponents of the Indian software product industry. For more information, visit www.ispirt.in

About Signal Hill
Signal Hill is a leading independent advisory boutique serving the M&A and private capital raising needs of growth companies. Signal Hill's experienced bankers provide deep domain expertise and an unyielding commitment to clients in our sectors: Software, Internet & Digital Media, Internet Infrastructure and Services. With over 600 completed transactions and offices in Baltimore, Bangalore, Boston, Mumbai, Nashville, New York, Reston and San Francisco, Signal Hill leverages deep strategic industry and financial sponsor relationships to help our clients
achieve Greater Outcomes®. For more information visit www.signalhill.com.

iSPIRT and Signal Hill release the first India Technology Product M&A Industry Monitor Report