India sealed M&A deals worth $104.3 bn this year, raised $6 bn from IPOs

India Inc signed 1,149 deals valued at $104.3 billion in the first half of this year, amid global uncertainties, and the country saw $6 billion from 17 IPOs -- the highest values raised in the first six months, a report showed on Thursday.

The figures represent a significant 34 per cent increase in the overall deal volumes, while deal values more than doubled (with a 143 per cent increase) from the same period last year, according to the Grant Thornton Bharat Dealtracker report.

Driven by HDFC Bank and HDFC Ltd's $40 billion merger, LTI and Mindtree merger ($17.7 billion) and Adani Group-Holcim Ltd's $10.5 billion deal, M&A deal values recorded an over two times increase over H1 2021.

These three deals alone accounted for 86 per cent of the total M&A deal values in H1 2022.

"Amid macro-economic stress, the overall deal sentiment for 2022 is expected to continue given the support from the government on infrastructure spending, supply-side response and key fiscal measures," said Shanthi Vijetha, Partner, Growth, Grant Thornton Bharat.

"However, corporates and more importantly PE/VCs may employ a cautiously optimistic approach as the impact of the global economic slowdown on the Indian economy becomes evident," Vijetha added.

While private equity deal activity continued to dominate total deal volumes with 3/4th share, deal values were driven by mergers and acquisitions with 76 per cent of the total deal values in H1 2022.

Startup, e-commerce and IT sectors led deal activity in H1 2022, driving 76 per cent of all deals followed by retail, education and pharma sectors.

The M&A space witnessed a significant increase in the first half, witnessing 284 deals while representing a 27 per cent growth over H1 2021.

The banking and financial sector had the highest contribution of 53 per cent in terms of overall deal value in H1 2022, followed by IT and manufacturing sectors.

The private equity and venture capital investments saw record volumes and values in the first six-month period with 865 deals at $25.1 billion.

However, there was a 12 per cent and 15 per cent decrease in investment volumes and values over H2 2021 (the preceding six months), the report noted.

"The drop in the deal values is due to a fall in big-ticket investments coupled with prevailing factors including geopolitical tensions, stock market volatility, concerns about the rise in commodity prices and the impact of inflation," the report noted.

Nevertheless, large funds like Tiger Global, Westbridge, Baring PE, TPG, Brookfield, Blackstone and Warburg Pincus, among others, continued to keep pace with their activity.

The start-up space attracted the most investment at $5.1 billion across 550 deals, recording a growth of 69 per cent in deal values.

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