New Delhi: As U.S. slowdown affects the global economy and currency woes disturb the markets, the IT sector also has taken the brunt. The investment via Merger and acquisition (M&A) and private equity (PE) in IT and ITes sector in the first half of 2008 has nearly halved when compared with the previous year, reported The Economic Times.

Grant Thorton, an international accounting firm, in its recent report said that the period from January to June in 2008 saw 85 transactions both via M&A and PE investment worth $760.17million against 112 transactions worth $1.47billion in the previous year.

In the first half of the 2008, there were 60 M&A deals worth $627.7 and about 25 PE investment, totaling $132.7 million. But in the same period of 2007, there were 75 M&A deals worth $1.02 billion and 37 PE fund transactions worth $455.61 million. Report denoted that the top five M&A deals in first half of 2008 were worth $287million compared to $618.94million in the same period of 2007.

While the highest acquisition of 2008 was of $80 million, in which 3i Infotech's acquired U.S based Regulus Group, while in the highest deal in the first half of 2007, SubexAzure acquired Canadian firm Syndesis for $164.5 million.

CG Srividya, Grant Thornton specialist advisory services partner, said, "with the slowdown in the U.S., exchange loss issues as well as valuations in the stock markets coming down, several players are not only waiting to see how things will turn out in the near future, but at present there is a large difference between the bid and ask prices for acquisitions and private equity investments."

She however expressed that deals in the sector are expected to pick up in the near future as Indian IT-ITeS companies look to acquire U.S. companies at highly attractive valuations in a bid to turn them around and the inevitability of consolidation in the domestic market.