This marks record volumes and values and indicates M&A and PE growing by 34% and 40%, respectively.
Delhi: According to the Grant Thornton Bharat Dealtracker report, India Inc has been busy dealmaking in the first half of 2022 with 1149 deals valuing USD 104.3 billion. This represented a significant 34% increase in the overall deal volumes, while values more than doubled - recording a 143% increase in the deal values. While private equity deal activity continued to dominate total deal volumes with 3/4th share, deal values were driven by M&As with 76% of the total deal values in H1 2022. Start-up, e-commerce and IT sectors led deal activity in H1 2022, driving 76% of all deals followed by retail, education and pharma sectors.
Commenting on the data, Shanthi Vijetha, Partner, Growth, Grant Thornton Bharat said, “Amid macro-economic stress, the overall deal sentiment for 2022 is expected to continue given the support from the government on infrastructure spending, supply-side response and key fiscal measures. These measures are expected to provide support to the economy from elevated commodity prices and cap the possibility of a second-round effect of inflation. However, corporates and more importantly PE/VCs may employ a cautiously optimistic approach as the impact of the global economic slowdown on the Indian economy becomes evident.”
Mergers and acquisitions (M&A) landscape: The M&A space witnessed a significant increase in H1 2022 witnessing 284 deals while representing a 27% growth over H1 2021 and a healthy 3% increase over H2 2021. Deal values which stood at USD 79.2 billion, marked the highest half-yearly values since 2011. M&A deal activity saw four multi-billion-dollar deals which alone accounted for 88% of values in H1 2022, including marquee deals like thes HDFC Bank-HDFC Ltd merger, LTI-Mindtree merger, Adani Group’s acquisition of Holcim’s Indian assets and the Axis Bank-Citicorp deal. The banking and financial sector had the highest contribution of 53% in terms of overall deal value in H1 2022, followed by IT and manufacturing sectors. Activity was driven by consolidation in tech-led sectors, the shift from unorganised to organised sectors and the partly domestic cyclical sectors after two years of impacted economic growth. The start-up sector contributed the highest in terms of deal activity in volumes, with 91 deals for H1 2022 against 42 deals in H1 2021.
Private equity (PE) landscape: The private equity and venture capital investments saw record volumes and values in the first six-month period with 865 deals at USD 25.1 billion. However, there was a 12% and 15% decrease in investment volumes and values over H2 2021 (the preceding six months). The drop in the deal values is due to a fall in big-ticket investments coupled with prevailing factors including geopolitical tensions, stock market volatility, concerns about the rise in commodity prices and the impact of inflation. Nevertheless, large funds like Tiger Global, Westbridge, Baring PE, TPG, Brookfield, Blackstone and Warburg Pincus among others continued to keep pace with their activity. The start-up space attracted the most investment at USD 5.1 billion across 550 deals, recording a growth of 69% in deal values. The e-commerce sector came next and pulled in USD 5.2 billion across 109 deals and the media & entertainment sector received investments worth USD 2.8 billion.
IPO and QIP landscape: The year also witnessed the highest funds raised in the first six months via IPOs across 17 issues. The deal landscape was driven by LIC’s USD 2.8 billion fundraise and eight other issues valued over USD 100 million predominantly in the retail, manufacturing, and banking sectors. Owing to market uncertainty, fundraising activity via the QIP route has witnessed a declined trend. H1 2022 witnessed seven issues raising USD 0.7 billion, the lowest sum raised in the last six years. The Indian Hotels Company Limited and Restaurants Brands Asia Limited (both in the hospitality sector) were the top two recipients of QIP funding.