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CY2022 starts with a 100% increase in deal volumes as compared to CY2021

Tech savvy sectors like start-ups, IT and e-commerce dominate both M&A and PE deals in January 2022

Delhi: India entered 2022 in a cloud of uncertainty due to the emergence of the new Omicron variant and related questions surrounding the global and domestic economic growth. Amidst this, India Inc saw the second highest number of monthly deals being executed in January 2022 at 242 deals valuing USD 5.1 billion, according to Grant Thornton Bharat’s Dealtracker Report. Compared with December 2021, the overall deal values and volumes recorded a marginal fall of 4% and 2%, respectively.

“2022 commenced with the third wave of COVID-19, thereby heightening the uncertainty in the economy. However, the much-awaited budget gave India Inc a lot of clarity on many sectors, that are aimed at boosting growth. Some of them are PM GatiShakti, productivity enhancement and investment, sunrise opportunities, energy transition and climate action, and financing of investments. These measures will further give a push to the deal activity in the coming months,” said Shanthi Vijetha, Partner, Grant Thornton Bharat

M&A dealscape: M&A deal volumes witnessed a 100% increase compared to January 2021 on account of over 2x increase in the domestic deal activity and 78% increase in the cross-border deal volumes. However, deal values witnessed 46% decline as cross-border deal values of January 2022 witnessed drastic fall owing to witnessing the Total SE- Adani Power deal valued at USD 2.5 billion in January 2021. M&A deal volumes also marked the highest monthly volumes recording 68 deals since March 2012, which saw 71 deals.

With 32% of M&A deal volumes, start-up sector continued to dominate the M&A deal activity with 22 deals valued at USD 106 million. Tech Mahindra acquiring CTC for USD 350.4 million and investing USD 22.8 million in two leading InsurTech Platforms was the M&A deal of the month. With this IT sector topped the M&A value chart for January 2022, which was equally dominated by deals in the IT solutions and software development segments within the sector with five deal each.

PE deals: PE investment values recorded USD 3.4 billion in January 2022 across 174 deals. This translated to a significant 182% increase in the deal values and 100% growth in deal volumes compared with January 2021. The uptrend in the deal activity was on the back of seven high-value investments valued at and over USD 100 million and 10 deals valued between USD 50 – 99 million, compared to only three and four such deals, respectively, witnessed in January 2021.

The start-up sector continued to drive the PE deal volumes and values for January 2022 with 63% share of PE volumes with investment values of USD 1.4 billion. Driven by two high-value investments, e-commerce sector led the investment values capturing 40% of PE values followed by IT, agriculture and forestry, education and retail and consumer sectors, which also witnessed aggregate deal values of over USD 100 million. Swiggy raising USD 700 million from Invesco and others at USD 10.7 billion valuation was the PE deal of the month.

The month witnessed the emergence of four unicorns - GlobalBees (A start-up, which is the second Thrasio-styled start-up to turn into a unicorn after Mensa Brands), LEAD School (Education), Darwinbox (IT and ITeS) and Mamaearth (e-commerce).

IPOs and QIPs: The month recorded only one Initial public offering (IPO) with an issue size of USD 91 million compared to 12 IPOs issues, raising USD 2.3 billion in December 2021, and three issues, raising USD 941 million in January 2021. Qualified institutional placement (QIP), on the other hand, witnessed muted activity.