India’s M&A activity gets off to a slow start in 2023: Refinitiv

• Overall deal making activity involving India witnessed a slow start and totaled $6.6 billion so far this year.
• Inbound M&A activity was down 85% from a year ago, while outbound deals were down 61%.
• There are also no deals bigger than $1 billion involving India so far this year.

India’s M&A activity got off to a slow start this year. As per Refinitiv, an LSEG business which provides financial market data and infrastructure, India clocked in M&A deals to the value of $6.6 billion from January to March 14, 2023. The figure was for $25 billion for the same period last year.

In a ‘Merger & Acquisitions data connect’ webinar, Refinitiv said that the total M&A volumes in India in 2022 stood at $172 billion across 2,557 deals. In 2021, it was at $124 billion across 2188 deals. In 2020 and 2019, the number stood at $74 billion and $84 billion respectively.

Says Elaine Tan, Senior Analyst at Refinitiv, “With the result of macroeconomic factors including the war in Ukraine, inflationary pressures, and rising interest rate — all of which have had an impact on market sentiment, valuations and the cost of debt financing deals, overall deal making activity involving India witnessed a slow start and totaled $6.6 billion so far this year, a 73.7% decline compared to the same period last year, while number of deals fell 3.17% year-on-year.”

With declines across all asset classes and regions, global investment banking fees fell 33% from 2021’s record-breaking annual total of more than $160 billion to less than $120 billion.

Among the top three deals in 2023 till date, is the deal with PhonePe (target) and and General Atlantic Service (acquirer).

‘Big pullback in M&A activity’

The top five sectors in India where the biggest deals happened in 2022 are industrials, financials, energy and power, high technology and consumer staples.

On the other hand media and entertainment, retail, real estate, materials and consumer products saw the smallest size deals. Worldwide the top sectors were industrials, energy and power, high technology, health care and real estate.

Tan added that M&A activity across domestic and cross-border transactions slowed down. Inbound M&A activity was down 85% from a year ago, Outbound M&A deals 61% year-on-year.

Private equity-backed deals, which saw record levels in 2021 and 2022, also started slow this year and reached US$2.2 billion to date, down 75% from a year ago.

“There are also no deals bigger than $1 billion involving India so far this year. With all the headwinds, we are seeing a big pullback in M&A activity compared to last year,” Tan said.