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July 2022 witnesses steep decline in deal values due to absence of big-ticket investments

The month gone by clocked a 7% fall in deal volumes and a steep 85% decline in deal values compared to July 2021

Delhi: According to the Grant Thornton Bharat Dealtracker report, India Inc has recorded 171 M&A and PE deals valued at USD 2 billion in July 2022. While M&A deal activity saw an uptick in deal volumes compared to June 2022, which saw the lowest monthly volumes in the last 19 months, the deal values saw a decline due to lack of high-value transactions and non-disclosure of values in the majority of the deals. On the other hand, YTD 2022 witnessed a 27% increase in deal volumes with values almost doubling to USD 106 billion.

Commenting on the data, Shanthi Vijetha, Partner, Growth, Grant Thornton Bharat said, “Like many other countries, Asia’s third-largest economy has also been grappling with soaring inflation, aggravated by rising commodity prices. A weaker rupee has further bumped up imported inflation. Nevertheless, start-up, e-commerce and IT led the deal volumes for the month, while infra, pharma, retail and banking sectors topped the overall value. The month saw the birth of only one Unicorn, OneCard, in the fintech segment.”

Mergers and acquisitions (M&A) landscape: M&A deals witnessed significant downtrend both in terms of deal volumes, by 14%, and deal values, by 95%, at USD 280 million for 32 deals in July 2022. In line with previous months, M&A activity was dominated by domestic consolidations, which constituted 84% of M&A volumes and 92% of values. Cross-border transactions recorded the second lowest, both in terms of deal volumes and values in last 12 months owing to global tensions. With 28% of M&A deal volumes each, the start-up and IT sectors continued to dominate deal activity with nine deals each cumulatively valued at USD 162 million.

Private equity (PE) landscape: The PE landscape saw 139 deals valued at USD 1.7 billion. While PE transactions continued to account for over 80% of overall deal activity, deal values witnessed a significant decline. The decline in funding was largely due to the absence of large investments and higher volume of deals in the early-stage category, resulting in lower value per deal. YTD PE investments witnessed record activity both in terms of volumes and values with 29% and 3% from the previous record, respectively. The start-up sector continued to drive the PE deal volumes for July 2022 with a 70% share of volumes, with investment values of USD 0.6 billion. The retail tech segment led the investment volumes in the start-up sector with 20% deals, followed by enterprise application and infrastructure and fintech at 18% each.

IPO and QIP landscape: YTD 2022 recorded 17 initial public offerings (IPO) with an issue size of USD 6 billion, compared to 28 IPO issues, raising USD 7 billion in YTD 2021. Qualified institutional placement (QIP), on the other hand, saw seven issues raising USD 677 million compared to 24 issues raising USD 4.4 billion over YTD 2021. Both IPO and QIP activity continue witnessing fall in the fund-raising activity via respective routes over last year.