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The deal journey for 2021 began with hope. January reported 119 transactions aggregating to USD 4.26 billion. While the number of transactions is about 9% higher than in January 2020, it is 6% lower as compared with December 2020. Based on the aggregate value of deals for the month, January 2021 is 27% and 13% lower than the deal values reported in January 2020 and December 2020, respectively.

Cross-border inbound transactions continued to drive the merger and acquisition (M&A) values in line with the trend in 2020. January reported cross-border transactions aggregating to USD 2.6 billion, constituting about 85% of the total value of M&A transactions. With 24 transactions for the month, domestic transaction volumes outnumbered its 2019 and 2020 numbers as well as the cross-border volumes. The average ticket size of M&A transactions barring the USD 2.5 billion cross-border investment by Total SE, France in Adani Green Energy Limited, remained low at USD 18.26 million as compared with USD 83.61 million in January 2020.

Deal summary – January Volume Value (USD million)
Year 2019 2020 2021 2019 2020 2021
Domestic 17 14 24 385 2,369 457
Cross-border 18 14 9 578 1,322 2,603
Inbound 9 8 2 327 1,263 2,506
Outbound 9 6 7 251 59 97
Mergers and internal
2 - - 1,025 - -
Total M&A 37 28 33 1,988 3,691 3,060
PE 56 81 86 1,322 2,117 1,201
Grand Total 93 109 119 3,310 5,808 4,261

Sector focus: Private equity/venture capital (PE/VC) transactions witnessed a 43% and 64% drop in aggregate values as compared with January 2020 and December 2020, respectively. The absence of transactions in the energy and natural resources sector and big-ticket transactions in the e-commerce and education sectors caused the void. The wait and watch approach, considering the budget announcement by the government in February 2021 to deal with the impact of the pandemic, could also be attributed to the low transactions in January 2021. The start-up, IT&ITeS, e-commerce, retail and consumer, pharma and healthcare sectors continued to magnetise transaction volumes. Energy and natural resources, infrastructure management and real estate sectors were the value drivers for the month. We expect this trend to continue for the year.

Outlook: The government’s focus in the Union Budget 2021 to provide a growth stimulus, by initiating large capital expenditures, encouraging privatisation, introducing structural reforms and asset monetisation, is expected to fuel up the overall transactions landscape with added incentives for investment trusts, the banking, financial and insurance sectors and the infrastructure sector.