Mumbai: India recorded 162 merger and acquisition (M&A) transactions worth $17.5 billion in the first six months of 2016, as M&A activity eased in line with a slowdown experienced in deal-making in the Asia-Pacific region, according to Mergermarket H1 India deal report.

Compared with the historical high in the same period a year ago, the deal count and deal value were 26.7% and 4% lower, respectively, the report said.

The construction sector occupied the largest share (20.5%) by deal value, recording seven deals worth $3.6 billion in H1 2016, compared with eight deals worth $0.8 billion in H1 2015.

“In the long run, a substantial growth by deal volume and deal value will be anticipated as the Modi government has committed to more infrastructure spending and relaxed FDI (foreign direct investment) rules in the construction sector. For now, mega-deals will be rare, as investors are waiting for construction projects to achieve stable cash flow,” the report said.

The technology, pharma, medical and biotech, and energy, mining and utilities (EMU) sectors saw a significant decline in deal volume.

The EMU sector saw 13 announcements worth $3 billion during the January-June period, almost a 50% drop in deal volume and a 14.4% decline in value from H1 2015.

Despite EMU’s shrinking presence, the renewables segment saw a pickup.

“Investors are very optimistic about solar and wind power business since the government has emphasized cheaper and cleaner power. June experienced one of the biggest M&A deals in India’s renewables segment on record (since 2001)—Tata Power Renewable Energy’s $1.4 billion purchase of Welspun Renewables Energy’s solar and wind power assets,” the report said.

The top three M&A deals in the first six months of the calendar year included UltraTech Cement Ltd’s $2.4 billion acquisition of Jaiprakash Associates Ltd’s cement plants, Tata Power Co. Ltd’s $1.4 billion acquisition of Welspun Renewable Energy Ltd’s wind and solar power portfolio and Blackstone Group LP’s $1 billion acquisition of IT services firm Mphasis Ltd.

In terms of cross-border M&As, inbound activity during the first six months of 2016 saw 82 deals struck, worth $8.9 billion. This is an increase of 21.9% in value from H1 2015, which saw deals worth $7.3 billion.

Outbound activity in H1 2016 bounced back from the two-year low seen in H1 2014 ($650 million), coming in at $2.5 billion, up 97.5% on a year-on-year basis. Indian companies were most keen on technology and industrials and chemicals, with these sectors witnessing 12 and nine deals, respectively, of a total of 40 transactions.

In the next six months, the focus of M&A activity could be the construction and renewables sectors, the report said. In addition, following Britain’s decision to exit the European Union, Indian conglomerates may consider cashing in some of their overseas investments to brace for upcoming changes in policies and regulations, it added.