“While the deal activity is subdued, the Indian market is still considered to provide good opportunities for deals and investments,” he added.
With the fear of a recession looming large, M&A and PE activities in India fell 60% to $1.8 billion across 89 deals in February, the second lowest in value terms since 2014. This also translated to a 54% decline in volume terms, compared with the same month a year ago, according to a report by Grant Thornton Bharat.
The M&A deal activity witnessed a significant downtrend both in terms of deal volumes by 48% and values by 47%, clocking 24 deals at $755 million, while the PE investment recorded only 65 deals worth $1 billion, the lowest monthly deal volumes and values since August 2020. These were mainly due to investors continuing to tread “cautiously” amid macroeconomic uncertainties.
“The US economic data has been pointing towards a slowdown; however, the recession is not confirmed yet. China has seen an accelerated reopening, and that has provided a boost to the commodity market. On the domestic front, the policy review also acknowledges that domestic economic activity is expected to remain resilient, aided by the sustained focus on capital and infrastructure spending in the Union Budget 2023-24,” Shanthi Vijetha, Partner-Growth at Grant Thornton Bharat said.
“While the deal activity is subdued, the Indian market is still considered to provide good opportunities for deals and investments,” he added.
While M&A values were dominated by cross-border deals, particularly outbound transactions, on the back of Samvardhana Motherson’s acquisition of SAS Autosystemtechnik for $578 million, the volumes continued to be dominated by domestic consolidations accounting for 67% of transactions. The start-up sector led the volumes with 25% of the deals, driven mainly by the fintech segment, followed by pharma, healthcare and biotech (with 17%) and IT and ITeS sector (13%).
Samvardhana Motherson transaction alone was responsible for 77% of the total M&A values, making it the fifth-largest deal in this sector in the last 12 years.
The decline in the PE funding was largely due to uncertain market conditions and the wait-and-watch approach adopted around the Budget 2023-24. With 60% of total PE deal volumes, the start-up sector continued to top the deal chart.
Retail tech witnessed heightened activity, followed by enterprise application and edtech segments together contributing to 54% of the start-up sector volumes. The e-commerce sector drove the values for the month on the back of three big-ticket fundings, all at and above $100 million. This month saw the largest ever Series A round by an Indian insurtech company, InsuranceDekho, which raised $150 million.
This transaction alone accounted for 38% of the sector’s values.
The year-to-date recorded one Initial Public Offering (IPO) with an issue size of $8 million, compared to three IPO issues of $1 billion in YTD 2022.
https://www.financialexpress.com/industry/india-witnesses-tepid-deal-making-in-feb-2023-grant-thornton-bharat/3009310/
