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India Inc experienced a significant decline in deal volumes and values during the first half of 2023, in light of the impact of global economic downturns, persistent inflation, and a decrease in high-value transactions. According to the Grant Thornton Bharat Dealtracker Report, deal volumes plummeted by 42%, with only 676 deals recorded, amounting to a total value of USD 23 billion, marking a substantial 78% decline compared to H1 2022.
Commenting on the performance of H1 2023, Shanthi Vijetha, Partner, Growth, Grant Thornton Bharat said, "The first half of 2023 witnessed a decline in deal activity in India, primarily due to supply chains disruptions, inflation, and fluctuating interest rates. However, with the positive macroeconomic conditions, reduced market volatility, and stable interest rates, increased deal making activity can be expected in the coming quarters. As India continues to be an attractive market for investors to capitalise on, reflecting the potential of the Indian market, a resurgence in deal activity is anticipated. "
Mergers and Acquisition (M&A) Landscape: The M&A space bore the brunt of the decline, witnessing a 47% decrease in volumes and a substantial 92% decline in values, primarily due to the absence of significant transactions observed in H1 2022, that saw two major historic deals in India: the HDFC – HDFC Bank merger and the L&T – Mindtree merger. These large-scale transactions significantly boosted deal values during that period. During the first half of 2023, both domestic and inbound deal activity experienced the second lowest levels of deal volumes since 2011. Outbound activity, on the other hand, reached its lowest volume with only 21 deals, due to absence of any billion-dollar deals.
The real estate sector drove the values in H1 2023 due to USD 2.45 billion deal - Suraksha Realty’s 100% acquisition of Jaypee Infratech. This deal alone accounted for 37% of the M&A values for the last six months. Driven by 34 deals, the start-up sector led the volumes in the M&A space.
Private Equity (PE) Landscape: In the PE/VC space, 521 deals were recorded, totalling USD 16.4 billion, representing a 40% decline in volumes and a 35% decline in values. However, H1 2023 witnessed three-billion-dollar deals and 29 high-value deals in the PE/VC sector, mitigating the steep decline observed in the M&A space. The pharma, healthcare, and biotech sector emerged as the leader in terms of value in the given year. This was primarily due to a significant one-billion-dollar deal and three other high-value deals within the sector, which combined were valued at USD 3.45 billion. These deals accounted for 21% of the total private equity (PE) values. Among them, Manipal Health Enterprises' fundraising from Temasek Holdings stood out as the largest deal ever recorded in the Indian healthcare sector, amounting to USD 2 billion. This deal alone represented 55% of the total sector values.
IPO Landscape: In the first half of 2023, there were 11 initial public offering (IPO) deals worth a total of USD 1.4 billion. This represented a 35% decrease in the number of deals and a 77% decrease in the total value compared to the same period in 2022. The decline can be attributed to the absence big size IPO listing. On the other hand, there were 10 qualified institutional placement (QIP) deals worth USD 794 million, indicating a 43% increase in the number of issues and a 17% increase in issues size compared to H1 2022.