Deal Activity In India Halves To $4.1 Billion In Value in August; Volume Down 40%

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The deal activity in India halved to $4.1 billion in value terms in August 2022 and saw about 40 per cent year-on-year fall in terms of volume, according to a report by consultancy firm Grant Thornton Bharat. It added that month-on-month, the deal volume in August at 131 transactions was 23 per cent lower but the value more than doubled due to two deals that were valued at over $1 billion.

“The downtrend in deal activity appears to be due to the cautious approach of buyers and investors in committing large capital, given the global macroeconomic scenario and capital market conditions. Hence, the absence of large ticket transactions. The deal activity is instead dominated by the early-stage companies, where the ticket sizes are low,” Grant Thornton said in the report.

It added that the mergers and acquisitions (M&A) deal activity declined compared to both, July 2022 and August 2021 and deal values, on the other hand, amounted to $1.5 billion (79 per cent increase over August 2021), driven by JSW Energy’s acquisition of 1.75 GW renewable portfolio of Mytrah Energy for $1.3 billion.

M&A deal activity, which is dominated by domestic consolidations, saw a 43 per cent drop over August 2021 recording 21 deals. This was also the lowest monthly volume witnessed in the past 22 months. Owing to this, the overall M&A volumes were the lowest monthly figure recorded to date after 17 deals witnessed in April and May 2020 (owing to COVID-19), the report said.

“The downtrend in deal activity appears to be due to the cautious approach of buyers and investors in committing large capital, given the global macroeconomic scenario and capital market conditions,” its partner Shanthi Vijeta said. The deal activity seems lower partly due to non-disclosure of values in most of the merger and acquisition deals, Vijetha added.

Private equity (PE) transactions recorded 110 deals with a fund inflow of $2.5 billion and continued to account for over 84 per cent of overall deal activity and 62 per cent of deal values for the month. However, both the volumes and values witnessed a significant decline compared to August 2021 which saw record monthly values and second highest volumes driven by 18 high-value investments of $100 million each.

The start-up sector continued to drive the PE deal volumes for August, with a 64 per cent share of PE volumes and the investment value was $300 million, it said.

“YTD (year to date) 2022 witnessed a 15 per cent increase in deal volumes with values nearly doubling to USD 110 billion. While PE deal volumes contributed to the overall increase in deal volumes, deal values were driven by billion-dollar M&A deals. YTD M&A deal volumes witnessed the highest volumes since 2015 and record YTD values. While YTD PE investments witnessed record volumes, investment values recorded a 13 per cent decline due to reduced big-ticket investments ranging between $100 and $999 million,” the report added.

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