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Delhi: According to Grant Thornton Bharat’s Dealtracker September 2022 report, Q3 2022 recorded only 450 deals worth USD 10.2 billion, the second lowest quarterly values seen in the last five years. Q3 2022 recorded 3 deals valued over USD 1 billion, 10 deals valued between USD 100 and USD 999 million, and 15 deals valued between USD 5 and USD 99 million.
Shanthi Vijetha, Partner- Growth at Grant Thornton Bharat, commented on the deal activity, saying, “Two black swan events – pandemic and the Russia-Ukraine geopolitical conflict have sparked inflationary conditions and significantly weighed on growth. Even as the outlook for global growth remains clouded by uncertainties, domestic growth is expected to hold up in the coming months. As the monetary policy measures aim to anchor inflation expectations, the macroeconomic situation is expected to improve on the back of high-frequency consumption and better industrial indicators. A shift in policy focus towards infrastructure, manufacturing, land, labour reforms, financial services sector could cumulatively contribute to an upswing in the private sector.”
Mergers and acquisitions (M&A) landscape: The M&A space recorded USD 4.7 billion across 79 deals this quarter. While this space continued to be dominated by domestic consolidation, there was a 25% decline in domestic deals from 82 deals in Q3 2021 and Q2 2022, to 60 deals in Q3 2022. This translates into a 30% decline in overall M&A volumes and a massive 62% decline in overall values when compared to Q3 2021. Further, the fall in the deal activity was also due to the lowest cross-border activity recorded for the Q3 period since 2011, valued at USD 596 million, marking the lowest deal values for the period mentioned above. Non-disclosure of deal values also added to the lower deal values. On the sector front, the start-up sector led the deal volumes, accounting for 27% of M&A volumes for the quarter. Deal volumes stood at 21, which is a 36% decline in deal volumes compared to Q2 2022 and a 30% decline compared to Q3 2021. Retail tech led the sector volumes, followed by edtech, fintech and travel, transport and logistics segments. IT, retail and e-commerce sectors also remained active, recording 35% of M&A deals.
Private equity (PE) landscape: Private equity investments recorded USD 5.4 billion across 371 deals. PE investments also witnessed declined activity in terms of investment volumes (24%) and investment values by 69%. A significant fall in the values was due to a sharp decline in the number of high-value investments. While Q3 2022 witnessed only nine deals valued at and over USD 100 million each, Q3 2021 saw two deals valued over USD 1 billion and 34 deals valued at and over USD 100 million. The start-up sector occupied the larger share of volumes with 68%, dominated by investments in retail tech companies, followed by fintech and enterprise applications and infrastructure segments. The quarter witnessed top deals across diversified sectors ranging from start-up, banking, energy, infrastructure, education, pharma and e-commerce, which accounted for about 90% of the PE deal values. Q3 2022 also saw the birth of four unicorns - Onecard, Molbio Diagnostics, Tata 1mg and Shiprocket.
IPO and QIP landscape: Q3 2022 witnessed a 78% decrease in IPO activity and a 92% decline in issue size compared to Q3 2021. This quarter saw only four IPOs closed in the month of August and September. Similarly, QIP fundraising witnessed four issues raising USD 326 million. While this was a 43% and 68% decline in volumes and issue size compared to Q3 2021, it saw a 33% and 139% increase in volumes and issue size compared to Q2 2022.