Deal making slows down significantly in February as investors turn cautious: Grant Thornton

• Deals in February dropped significantly in both volume and value terms, as compared to last year.
• Investors continue to tread cautiously amid macroeconomic uncertainties, says Grant Thornton.

Uncertain macroeconomic conditions have taken a toll on deal making in India – which have slowed down significantly in the month of February.

India recorded only 89 deals, valuing $1.8 billion in February, which dropped by 54% in terms of volume, and 60% in terms of value, as compared to last year. Investors continue to tread cautiously amid macroeconomic uncertainties, according to Grant Thornton Bharat’s Dealtracker February 2023 report.

This also marked the second-lowest deal volumes and lowest values recorded since 2014, the report said.

The report highlighted that activity in the merger and acquisitions witnessed a significant downtrend — declining by 48% in terms of volume, and 47% by value compared to February 2022. February 2023 clocked in 24 deals at a total value of $755 million.

“US economic data has been pointing towards a slowdown; however, the recession is not confirmed yet. China has seen an accelerated reopening, and that has provided a boost to the commodity market. On the domestic front, the policy review also acknowledges that domestic economic activity is expected to remain resilient, aided by the sustained focus on capital and infrastructure spending in the Union Budget 2023-24,” said Shanthi Vijetha, partner- growth at Grant Thornton Bharat.

Funding winter for PE investments
The private equity investment trend also witnessed a drop both in terms of deal values and volumes with only 65 deals worth $1 billion taking place during the month.

The year 2023 also witnessed the continued funding winter in terms of both PE deal volumes and value.

The report shares that the decline in PE funding was largely due to uncertain market conditions and the wait-and-watch approach adopted around the Budget 2023-24.

“While the deal activity is subdued, the Indian market is still considered to provide good opportunities for deals/investments. As a result, the Union Budget 2023 avoided populist measures in the pre-election year and prioritised long-term growth,” added Vijetha.

The IPO market was slow too this year, with just three IPOs getting publicly listed on exchanges so far.

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