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Q3 clocks record 597 deals worth USD 30 billion, surpasses pre-COVID-19 levels

India Inc’s deal activities continue unabated. Start-ups drove volumes both in M&A and PE deals in Q3 2021. The quarter witnessed 11 unicorns, highest IPO issues in a decade

Delhi: In line with the upbeat market sentiments, a record 597 deals amounting to USD 30 billion were reported in Q3 2021 according to Grant Thornton Bharat Dealtracker. The quarter also witnessed the highest number of IPO issues in over a decade with 18 issues amounting to USD 5 billion.

The year so far has recorded a deal value of USD 73 billion across 1,454 deals, 25% higher than YTD 2020 with USD 58.5 billion. The sustained economic growth is due to the rapid expansion in the services sector and accelerated manufacturing activities. 

“2021 has seen greater resilience, digital insurgency, and inventions driving the deal activity in the recent months. The year witnessed growth every quarter and we expect the trend to continue for the coming quarters. The monthly expansion in services and manufacturing activity coincided with relatively low new COVID-19 cases and enhanced pace of vaccinations across the nation,” said Shanthi Vijetha, Partner, Grant Thornton Bharat

There has been an 86% increase in deals in Q3 2021 compared to the same period in 2020. While there has been a substantial increase in deal volumes, the quarter witnessed a healthy increase in values by 31%. Corporate and private acquirers continued their momentum with megadeals leading to four billion-dollar deals and 50 deals of over USD 100 million each during the quarter.

M&A dealscape

For Q3 2021, M&A deals were valued at USD 12.8 billion, a 10% decrease compared to Q3 2020. The dip in deal values was due to the absence of high-value deals during the said time. While IT sector dominated the M&A deal values with USD 5.2 billion worth deals, start-ups drove the volumes.

Cross-border deal activity, especially inbound acquisitions, have been encouraging. They were driven by large ticket transactions valued at USD 7.9 billion compared with USD 120 million worth of deals executed in Q2 2021 across seven deals. The third quarter of 2021 witnessed two spectacular inbound transactions - PayU’s acquisition of Billdesk for USD 4.7 billion and Sumitomo Mitsui Financial Group’s acquisition of Fullerton India Credit Company for an estimated USD 2 billion. These two deals accounted for over 52% of the total M&A values in Q3.

Overall, although there were six high-value deals worth over USD 500 million in Q3 2021 totalling to USD 9.2 billion, majority of the M&A deal values were driven by smaller-ticket deals. Other sectors such as banking and financial, telecom, e-commerce, energy, and infra sectors too witnessed high-value transactions.

PE deals

Buoyed by the considerable increase in both volumes and sizes, the PE deals witnessed robust growth in Q3 2021. PE deals had an action-packed Q3 with all-time high deal activity in volumes and values at USD 17.1 billion, across 486 investment rounds.

Both volumes and values saw a 2x increase compared to Q3 2020. Compared to the previous quarter the volumes were up by 44% and values saw strong 24% growth. The heightened PE deal activity demonstrates investor confidence in India’s growth story despite the pandemic. As many as 11 unicorns emerged during the quarter.

Start-ups claimed a major share in deal volumes at 64%, while e-commerce trumped in deal values with 30% share. Retail and consumer, education and pharma sectors remained active together constituting 11% of PE volumes. High-value investments were also witnessed in sectors such as IT, telecom, education, banking, media and entertainment, energy, manufacturing, hospitality and pharma.

IPOs and QIPs

The year witnessed companies raising the highest amount through the IPO route in over a decade for the YTD period, with 42 issues amounting to USD 10.3 billion. Despite the impact of the COVID-19 pandemic, the country witnessed a record number of IPOs this year. Q3 2021 recorded the highest number of issues in any given quarter, since 2011, with 18 issues amounting to USD 5 billion.

There has been a trend reversal in 2021 compared to 2020 when QIPs dominated the market. YTD 2021 recorded 28 QIPs issues amounting to USD 5.2 billion, 43% lower fundraising. Issue volumes on the other hand recorded the highest for the YTD period since 2011, Q3 however, saw only seven QIP fundraises.