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The financial services sector commenced the year with renewed momentum, reflecting a measured yet forward-looking investor sentiment amid macroeconomic uncertainties. Strategic activity in both mergers and acquisitions and private equity funding has highlighted targeted interest in scalable opportunities, particularly in areas aligned with digital finance, innovation, and credit-oriented models. Regulatory developments announced in the national budget have signalled continued alignment between public policy and private capital, reinforcing the importance of simplification and growth-oriented reforms.
Despite volatility in capital markets and external pressures, select segments such as insurance, banking, and financial services have demonstrated resilience and attracted focused investment. Shifts in monetary direction and expectations around capital expenditure are likely to influence funding activity in the quarters ahead. The latest edition of the Financial Services Dealtracker presents a clear view of the transactional landscape in the BFSI sector during Q1 2025, providing an analytical lens on deal drivers, sectoral performance, and investor behaviour shaping the year’s trajectory.
Q1 2025 witnessed an increase in the overall deal activity over Q4 2024 as well as Q1 2024 both in terms of volumes and values, indicating heightened investor interest amid global uncertainties. The performance of sectors aligns with the broader trend and outlook for 2025, anticipating high value deals and continued investor confidence.
M&A deal activity witnessed increased average deal size at USD 143 million driven by four high value deals (≥USD 100 million) together valued at USD 985 million and one multi-billion dollar deal worth USD 2.8 billion in the insurance space. Outbound consolidations witnessed limited traction, although there was an increase over the previous quarter with four small ticket deals across the UAE and North America.
PE activity witnessed stable volumes and a marginal 2% increase in value over Q4 2024, dominated by the Banking, NBFC and Fintech segment accounting for 78% of deal values, clearly indicating the ongoing interest of the investors on credit-oriented institutions.
QIP activity, which otherwise picked up last year, recorded the second-lowest quarterly volumes and deal value since Q2 2023, while the quarter witnessed muted IPO activity for the first time since Q2 2023.
