According to Grant Thornton Bharat’s Dealtracker January 2023 report, India Inc recorded 145 deals, valuing USD 2.7 billion, the second highest volumes witnessed after 244 deals recorded in January 2022. However, there was an overall decline in deal activity owing to a significant drop in the M&A deal space. When compared with December 2022, the deal volumes witnessed a marginal 3% increase, while values declined by 62% due to the absence of big-ticket transactions.
Shanthi Vijetha, Partner- Growth at Grant Thornton Bharat, commented on the deal activity, saying, “The past year has been a rocky road for the deal activity, with economies witnessing continued shutdowns, salary freezes and layoffs, leaving investors uncertain about their portfolios and future investments. Despite global tensions, India’s macroeconomic outlook continues to remain strong, making it an attractive destination for sector-wide foreign investments. Although the deal momentum in January 2023 did not match expectations and witnessed a declining trend, domestic deal activity is expected to remain at the forefront of M&A activity and PE/VC funds are expected to direct their capital into the attractive Indian market, throughout the year.”
Mergers and acquisitions (M&A) landscape: M&A deal volumes declined by 62%, at 26 deals valuing USD 311 million, owing to the volatile market conditions and the cautious approach adopted by strategic investors. While the segment continued to be dominated by domestic deals, it recorded the lowest monthly values at USD 311 million since May 2022 at USD 270 million. The drop in the deal values can also be attributed to the absence of big-ticket transactions that saw only one deal valued over USD 100 million. The energy and natural resources sector accounted for 56% of the total values while the IT and ITeS sector drove volumes and recorded eight deals accounting for 31% of total deals. The start-up and retail and consumer sectors accounted for 30% of the volumes. Vedanta acquiring Meenakshi Energy for USD 176 million was the largest M&A deal of the month gone by.
Private equity (PE) landscape: Private equity (PE) investments recorded 119 deals valued over USD 2.4 billion, and while both volumes and values declined compared to January 2022, there was a 28% increase in deal volumes and a 30% increase in deal values from last month (December 2022). PE/venture capital (VC) deals accounted for 82% and 88% of overall deal volumes and values for January 2023, respectively. While PE activity declined, the month gone by still witnessed five big-ticket investments together worth USD 1.6 billion. Start-ups continued to drive volumes, accounting for 66% of deals. Driven by two big-ticket transactions in the pharmaceutical segment, the pharma, healthcare and biotech sector topped the value chart with 38% of deal values. E-commerce emerged as the leading sector both in terms of deal volumes and values, following the start-up and pharma, healthcare and biotech sectors. Advent International acquiring a 50.1% stake in Suven Pharma for USD 770 million was the largest PE deal of the month gone by.
IPO and QIP landscape: The initial public offering (IPO) and qualified institutional placement (QIP) activity has been declining consistently since 2022. January 2023 recorded only one IPO, Sah Polymers Limited IPO worth USD 8 million, whereas QIPs showed muted activity.