India Inc saw a decline in deal value in July to $2 billion due to the lack of high-value transactions and non-disclosure of values in the majority of the deals, with 171 M&A (merger and acquisition) and PE (private equity) transactions taking place, according to a report by Grant Thornton Bharat. However, deal volumes witnessed a 27 per cent jump so far this year, with values almost double to $106 billion.
“While M&A deal activity saw an uptick in deal volumes compared to June 2022, which saw the lowest monthly volumes in the last 19 months, the deal values saw a decline due to lack of high-value transactions and non-disclosure of values in the majority of the deals. On the other hand, YTD 2022 (year-to-date 2022) witnessed a 27% increase in deal volumes with values almost doubling to $106 billion,” according to the Grant Thornton Bharat Dealtracker report.
Shanthi Vijetha, partner (growth) at Grant Thornton Bharat, said, “Like many other countries, Asia’s third-largest economy has also been grappling with soaring inflation, aggravated by rising commodity prices. A weaker rupee has further bumped up imported inflation. Nevertheless, start-up, e-commerce and IT led the deal volumes for the month, while infra, pharma, retail and banking sectors topped the overall value. The month saw the birth of only one Unicorn, OneCard, in the fintech segment.”
The report said M&A deals witnessed a significant downtrend both in terms of deal volumes by 14 per cent to $280 million and deal values by 95 per cent to 32 deals in July 2022. In line with previous months, M&A activity was dominated by domestic consolidations, which constituted 84 per cent of M&A volumes and 92 per cent of values.
“Cross-border transactions recorded the second lowest, both in terms of deal volumes and values in last 12 months owing to global tensions. With 28 per cent of M&A deal volumes each, the start-up and IT sectors continued to dominate deal activity with nine deals each cumulatively valued at $162 million,” it said.
The PE landscape saw 139 deals valued at $1.7 billion. While PE transactions continued to account for over 80 per cent of overall deal activity, deal values witnessed a significant decline. The decline in funding was largely due to the absence of large investments and higher volume of deals in the early-stage category, resulting in lower value per deal.
The year-to-date PE investments witnessed record activity both in terms of volumes and values with 29 per cent and 3 per cent from the previous record, respectively. The start-up sector continued to drive the PE deal volumes for July 2022 with a 70 per cent share of volumes, with investment values of $0.6 billion. The retail tech segment led the investment volumes in the start-up sector with 20 per cent deals, followed by enterprise application and infrastructure and fintech at 18 per cent each.
This year so far has also recorded 17 initial public offerings (IPO) with an issue size of $6 billion, compared with 28 IPO issues, raising $7 billion in YTD 2021. Qualified institutional placement (QIP), on the other hand, saw seven issues raising $677 million compared to 24 issues raising $4.4 billion over YTD 2021. Both IPO and QIP activity continue witnessing a fall in the fund-raising activity via respective routes over last year.
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