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Global headwinds and muted financials shaped deal activity in the financial services sector during the opening quarter of 2026. India recorded steady growth alongside low inflation, even as geopolitical developments, tariff-linked pressures and the war in West Asia influenced sentiment and capital flows.
The Union Budget 2026 introduced measures on foreign investment rules, bond market depth and funding avenues for acquisitions, setting the tone for transactions. The Q1 2026 edition of the Financial Services Dealtracker analyses these shifts and captures underlying dealmaking trends across segments. Capital markets reflected caution, while private capital adopted a measured approach to transactions. Investors prioritised discipline and selectivity, leading to limited activity in the absence of large transactions.
Q1 2026 witnessed a moderation in overall deal activity with 63 deals valued at USD 2 billion. The quarter marked the lowest deal value since Q3 2023, primarily driven by the absence of big-ticket deals across segments that witnessed 19 deals valued at USD 16.8 billion last quarter compared to only 5 deals this quarter.
M&A witnessed a sharp slowdown in Q1 2026, marking the lowest quarterly value since Q1 2025 with 16 deals at 0.3 billion. The decline was driven by the lack of marquee transactions, resulting in a sharp contraction in average deal sizes — from USD 333 million in Q4 2025 to USD 18 million in Q1 2026.
PE/VC activity also moderated following a strong Q4, with volumes and values declining sequentially. Despite this, it remained the dominant driver of deal activity, supported by continued investor interest in scalable and credit-driven financial platforms. However, Q1 2026 fared better compared to Q1 2025, both in terms of volumes and values.
Public market activity weakened significantly, with just one IPO and one QIP during the quarter after doing well in Q3 and Q4 2025. The combined volumes of IPO and QIP saw a decline of 98% in comparison to Q4 2025 due to market volatility, heightened geopolitical risks, energy and supply chain uncertainties and global policy uncertainty.
Fintech, Banking and NBFCs continued to anchor the sector, contributing 79% of volumes and 85% of total value. In contrast, Insurance and Financial Services segments saw a significant slowdown in activity.
The Q3 2025 edition of Grant Thornton Bharat’s Financial Services Dealtracker analyses key deal trends across M&A, PE, IPOs, and QIPs. It explores investor sentiment, fintech-led innovation, and regulatory signals influencing capital flows in banking, NBFCs, insurance, and asset management.
This Financial Services Dealtracker Q2 2025 edition provides insights into deal volumes, investment trends, and sectoral movements that shaped the quarter’s performance.
The financial services sector commenced the year with renewed momentum, reflecting a measured yet forward-looking investor sentiment amid macroeconomic uncertainties.
