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India Inc defies global economic trend; start-ups drive volumes in 2022: Annual Dealtracker

According to Grant Thornton Bharat's Annual Dealtracker report, India Inc recorded 2,007 deals worth USD 127 billion in 2022, which translates to a 6% decrease in deal volumes over 2021 (a record year). 2022 saw a 47% increase in the values on the back of a few marquees deals that no other year witnessed. The year also recorded 11 multi-billion-dollar deals amounting to USD 82.5 billion and 97 deals valued between USD 100 and USD 999 million, amounting to USD 26.2 billion.

Shanthi Vijetha, Partner - Growth at Grant Thornton Bharat, commented on the annual deal activity, saying, "Deal trends of 2021 were carried over into 2022 - be it consumer preference to digital commerce or accelerated adoption of digitisation by businesses. It is worth noting that even against the global recession outlook, India has been faring well. However, deal activity witnessed two different phases, as the second half did not see the highs of the first half. Domestic and outbound M&A continued to see momentum on the back of a resilient domestic economy, whereas PE investments and inbound M&A slowed down due to funding winter and global uncertainty."

Mergers and acquisitions (M&A) landscape

The Indian M&A space recorded 477 deals worth USD 91.4 billion in 2022, marking record deal values, a 200% increase compared to 2021. Deal values were driven by the HDFC and HDFC Bank merger (USD 40 billion), which was the biggest deal ever in Indian history. However, barring this deal, the year witnessed a significant increase in values showing the positive outlook of the Indian markets. The start-up and IT sectors dominated the space with 44% of total volumes, while the banking and manufacturing sectors led the values. An exciting trend witnessed in 2022 was that while new-age sectors like start-up and e-commerce had more deals, the traditional sectors led in value as they could easily justify their numbers.

Private equity (PE) landscape

The PE space saw 1,530 deals worth USD 35.4 billion in the year gone by. This included four deals in the billion-dollar category and 66 deals valued between USD 100 million and USD 999 million, accounting for 63% of total PE deal values with only 5% of deal volumes. The start-up space attracted the most investment (USD 7.4 billion across 991 deals) with a slight decline of 8% in volumes, compared to the 34% decline in investments indicating lower ticket size investments, followed by e-commerce, which pulled in USD 6.6 billion and declined by 56% in investments. Both these sectors accounted for 75% of total PE deals this year. In terms of city focus, Bangalore topped the charts in volumes as most companies were born there, and Mumbai topped in values and accounted for 27% of total values.

Initial public offerings

2022 witnessed the second-highest number of initial public offerings (IPO) listings in the last 11 years. However, this translated into 40 IPO listings raising USD 8.3 billion, a 38% decrease in volumes and a 53% decrease in values. Still, given the circumstances, it would've been difficult to predict at the start of the year. Investors remained jittery throughout 2022 on recessionary fears and rising interest rates amidst soaring inflation, which decreased IPO listings, especially in the first half. Traditional sectors like manufacturing, real estate and banking were more active this year than the new-age sectors since start-ups, IT and e-commerce opted for different routes to raise funds rather than going public before turning profitable. 2022 saw the biggest IPO in issue size- LIC IPO, which accounted for 33% of total values.

Qualified institutional placements

2022 saw 14 qualified institutional placements (QIP) issues, raising USD 1.5 billion. QIPs lost lustre as volatility kept sentiments weak. 2022 will be the second year when Indian companies refrained from raising funds through the QIP route, which was popular in the years before the pandemic. Equity fund-raising through QIP dropped to USD 1.5 billion in 2022, a 76% decline in values compared to last year. Banking, financial services, and manufacturing led the volumes in the QIP segment. Macrotech Developers marked the top QIP issue accounting for about 29% of total values.

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