As mergers and acquisitions take a back seat in India, find out the sectors seeing maximum action

• Inbound mergers, and acquisitions (M&A) dropped by 73.9% to $3.6 billion, while outbound M&A dropped 58.8% to $2.1 billion.
• Private equity-backed M&A amounted to $2.6 billion, marking a significant decline of 76.6% compared to the previous year.
• The industrials sector attracted the most activity, totaling $2.3 billion, and capturing a 21.5% market share.

In the first quarter of 2023, India's involvement in M&A (merger and acquisition) activity experienced a significant decline, reaching a seven-year low of $10.8 billion. This represents a 68.3% decrease compared to the previous year, accompanied by a 3.3% drop in the number of announced deals, according to the ‘India Investment Banking Review Q1 2023’, by Refinitiv, a provider of financial markets data.

Industrials top the list

Within the Indian deal-making landscape, the industrials sector attracted the most activity, totaling $2.3 billion, and capturing a 21.5% market share, which represents a 1.1% increase from the previous year. Financials accounted for $1.9 billion with a 17.8% market share, down 55.2% from the previous year.

India involvement M&A by target sector ($ billion)
Industrial	2.3
Financials	1.9
Energy and Power	1.3
Healthcare	1.1
Consumer staples	1
Materials	0.8
High technology	0.8
Retail	0.6
Consumer product and services	0.4
Telecommunications	0.4
Media and entertainment	0.1
Real Estate	0.1

High technology sector sees a green pasture

The energy and power sector captured an 11.8% market share worth $1.3 billion, reflecting a substantial increase of 123.6% compared to the previous year. Although the high technology sector witnessed the highest number of announced deals in the first quarter of 2023, it accounted for only a 7.4% market share with $801.0 million, indicating a significant 90.9% decrease in value from the previous year.

Says laine Tan, Senior Analyst at Refinitiv, “Deal making involving India saw its third consecutive quarterly decline in activity during the first quarter of 2023, making it the slowest start to a year since 2016, as several headwinds such as geopolitical tensions, supply chain disruptions, rising interest hikes and global recession fears continue to dampen boardroom confidence and investor sentiment. Given the global macroeconomic uncertainty, deal makers are taking a relatively cautious approach, translating into fewer large deals. In fact, no deals bigger than $1 billion involving India have been announced during the first quarter of 2023.”

The overall picture

Specifically, target India M&A activity amounted to $8.5 billion, marking a 70.4% decline from the previous year, and representing the lowest value for a first quarter period since 2016. In this, domestic M&A activity reached $4.9 billion, down 67.3% from the same period in 2022. Inbound M&A dropped by 73.9% to $3.6 billion, while outbound M&A amounted to $2.1 billion, reflecting a 58.8% decrease compared to the previous year.

The United States was the most targeted nation, accounting for 39.2% of the market share.

Private equity-backed M&A in India amounted to $2.6 billion, marking a significant decline of 76.6% compared to the previous year and representing the lowest value for a first quarter period since 2020.