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Grant Thornton
According to the Grant Thornton Bharat Dealtracker July 2023, India Inc experienced the effects of evolving economic conditions. Recording 95 deals amounting to USD 3.1 billion, July 2023 reflects a calculated strategy in the business world.
While deal volumes saw a 46% decrease compared to the same period in 2022, the market surged with a 58% increase in deal values. The catalyst for this growth was the emergence of nine big-ticket transactions valued over USD 100 million, aggregating an impressive USD 2.1 billion.
Shanthi Vijetha, Partner, Growth, Grant Thornton Bharat, said, “The impact of the global economic slowdown is also being felt in the deal activity in India as it has been subdued since the beginning of the year compared to 2022. While the cross-border transactions propelled the surge in total deal values, carefulness in private equity investment caused a reduction in overall volumes. However, India's attractiveness as a destination for deal-making and investments is expected to persist and H2 2023 to witness improvement in deal activity, despite the global macroeconomic conditions.”
M&A Landscape:
The M&A sector displayed a nuanced trend, experiencing a 17% decrease in deal volumes but a staggering 7x increase in values in contrast to July 2022. This surge is anchored by 29 deals valued at USD 2 billion, where six high-value transactions encompassing traditional sectors like IT, auto, retail, and manufacturing took centre stage.
M&A values were driven by Proximus Opal's 58% controlling stake acquisition in Route Mobile for $721 million. Notably, outbound activity reached its highest monthly level in 2023, while inbound activity recorded the highest monthly values since July 2021.
Private Equity (PE) landscape:
PE investments experienced a modest decline with 66 deals, at $1.1 billion million, marking the second lowest monthly volumes and values since August 2020. Boost in average deal size to USD 16.5 million compared to USD 12 million in July 2022 was propelled by three high-value deals.
The startup sector dominated the deal activity, accounting for 44% of total PE volumes. Notably, the month continued to observe a significant presence of B2B start-ups, which accounted for more than 52%. Bain Capital's 90% stake in Adani Capital Private Limited and Adani Housing Finance Private Limited marked the biggest deal in the sector, for USD 176 million. IPO Landscape:
July 2023 witnessed a triumphant stride in the capital markets, with three IPOs collectively raising USD 187 million across the IT, retail, and banking sectors. This is in stark contrast to the stagnant IPO landscape of July 2022.
Similarly, Qualified Institutional Placements (QIPs) demonstrated momentum, showcasing four issues valued at USD 668 million. This feat can be attributed to the strategic QIP allotments by Aditya Birla Capital and Federal Bank, commanding a substantial 87% of the QIP values. This remarkable leap is again in stark contrast to the dormant QIP scenario of July 2022.
Year-to-Date (YTD) 2023 volumes for the year showed a remarkable 42% decrease, with a decline in deal values plummeting by a staggering 75%, reaching a total of USD 26.2 billion. The starkness of this decline can be attributed in part to the exceptionally high benchmark set by landmark deals witnessed during the YTD 2022 period.
These included noteworthy mergers and acquisitions such as the HDFC- HDFC bank merger, LTI-MindTree, and deals involving the Adani Group with Ambuja Cement Ltd and ACC Ltd, all of which were valued at over USD 10 billion each.
In conclusion, the year 2023 has brought about a marked downturn in the Indian deal-making landscape, characterized by restrained investor actions and a dearth of substantial investments amid global economic uncertainties. The path forward hinges upon the market's adeptness in addressing these challenges, setting the stage for a prospective resurgence.
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