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PE deals activity at a 15-month high in India, marking a shift trend: Grant Thornton

With 307 PE deals totalling $8.1 billion – it's their best quarter since April-June of 2023.

This quarter marks a significant shift in investment trends in the PE landscape, says Grant Thornton.

While the number of M&A deals dropped 16%, their values rose by 38% due to the mega Reliance-Disney merger The private equity deals in India have picked up pace in the January-March 2024. With 307 deals totalling $8.1 billion – it's their best quarter since April-June of 2023, says a report by Grant Thornton. In terms of deal volumes, Jan-March is seeing its best quarter in 18 months.

This marks a significant shift in investment trends in the PE landscape, Grant Thornton's Q1 Deal Tracker.

“Private Equity funds stood at a crossroads at the end of 2023: to wait for clearer market signals or to deploy the substantial dry powder accumulated from a year rich in exits. The data from Q1 2024 indicates a decisive tilt towards the latter, as evidenced by a noticeable uptick in PE deals, underscoring renewed commitment to nurturing growth across pivotal sectors,” says Vishal Agarwal Partner and Private Equity Group & Deals Tax Advisory Leader

Since Q4 of 2024, PE deals have seen a 10% increase in volumes and a 51% increase in values. The country also minted two unicorns, Krutrim SI Designs and Perfios, in the first quarter of the year.

“Following a period primarily focused on exits through IPOs and block deals, Q1 witnessed a robust pivot in strategy, with keen interest across sectors such as consumer goods, financial services (particularly insurance and technology), telecom, and infrastructure,” says the report.

The big deals are back too as the quarter saw two billion dollar deals and eight deals over or at $100 million. The top deal of the quarter was Data Investment Trust's investment of $2.5 billion in ATC India Tower Corporation.

“The uptick in PE activity, highlighted by the emergence of two unicorns and high-value deals across traditional sectors, provides hope for continued growth and investment opportunities. With upcoming events such as the elections, coupled with a strong pipeline of deals and increased attention from private capital, the outlook for 2024 remains optimistic," said Shanthi Vijetha, partner growth at Grant Thornton Bharat.

Disney boost to M&A deals

While the number of M&A deals dropped 16% from 143 to 120, values rose by 38% to $12.3 billion —- all thanks to the Reliance-Disney merger. It also pushed up outbound deals which saw a 9x surge.

The market showcased resilience amid changing dynamics. Notably, while domestic M&A volumes experienced a decline over the past year, cross-border activity surged to its second-highest quarterly level in five years.

In Q1 of 2024, as many as 24 initial public offers amounted to $2 billion — the second-highest quarterly count in recent times. These IPOs were spread across 11 sectors, with manufacturing and pharmaceuticals emerging as the frontrunners, collectively capturing one-third of the issues.

Companies also raised a similar amount — $2 billion — spread over 18 issuances. Despite a slight decrease in both the volumes and the amount raised, it's the second-highest quarter in terms of deal volumes since 2018.

“This highlights a resilient market environment, reflective of diverse investor interest across sectors and continued opportunities for capital raising,” the report says.

Overall, the quarter saw 469 deals amounting to $24.5 billion, marking the highest level of activity since Q2 of 2022.

The Indian passenger vehicles segment has recorded decent growth in March 2024.