2024-01-04 14:19:25
India-focussed M&A activity fell to a three-year low in 2023 at $83.8 billion in 2023, down 50.6 per cent from a year ago, latest data from LSEG Deals Intelligence showed. In 2022, the total M&A activity stood at $169.70 billion and $123.14 billion in 2021.
Target India M&A activity in 2023 reached $76.4 billion, down 51.5 per cent from a year ago, and the lowest annual period by value since 2020. Domestic M&A activity in 2023 totalled $51.8 billion, down 56.4 per cent from the same period in 2022.
While inbound M&A fell 36.4 per cent from a year ago and totalled $24.6 billion, the lowest annual period since 2015. Outbound M&A activity reached $5.9 billion, down 40.4 per cent year-on-year with the US being the most-targeted nation with a 22.6 per cent market share.
Private equity-backed M&A in India amounted to $13.4 billion, down 60.7 per cent from a year ago, and the lowest annual total since 2020.
A majority of the deal-making activity involving India targeted the financials sector, which totalled $ 31.4 billion, down 56.0 per cent in value from a year ago, which accounted for 37.5 per cent market share. Industrials totalled $12.9 billion, down 8.7 per cent from 2022, capturing 15.4 per cent market share. High technology, which saw the greatest number of deals announced in 2023, captured 10.8 per cent market share, with $ 9.1 billion worth of deals, down 59.2 per cent compared to last year.
Elaine Tan, Senior Manager, LSEG Deals Intelligence, said: “Global economic uncertainty, driven by various factors such as geopolitical tensions, increasing interest rates, inflations concerns, regulatory changes and valuation challenges, has made companies more cautious regarding engaging in M&A activity. Worldwide M&A fell 17 per cent to a 10-year low and totalled $2.9 trillion worth of transactions”.
In line with the global decline, India’s deal-making activity hit a three-year low following witnessing a 51 per cent decline in value following hitting a record high last year, Tan added.
Tan said that improved economic conditions and expectations for lower interest rates in 2024, making capital less costly to access, might drive an uptick in India’s M&A activity in 2024, especially following elections.
“Taking out the HDFC Bank-HDFC $60.4 billion jumbo deal, year-on-year deal value comparison would be down 23 per cent. The bleak environment translated to fewer mega deal transactions this year which drive headline numbers.
“Only one deal above $3 billion was announced this year involving India, compared to five deals last year (which included the HDFC Bank-HDFC $60.4-billion deal). By number of announced deals, India M&A saw a minimal 1.7 per cent decline year-on-year, indicating that a healthier level of mid-market transactions dominated the market,” Tan added.
ECM ACTIVITY
Despite the macroeconomic headwinds, the new IPO listing rule in India, strong secondary market and robust investor demand have bolstered the India equity capital markets (ECM) activity, said LSEG Deals Intelligence. ECM issuances by Indian companies reached $31.2 billion, up 60 per cent from a year ago, making it the highest annual total since 2021. Total proceeds from follow-on offerings more than doubled, raising $ 24.4 billion, driven by record-high block trades which accounted for 64 per cent of the follow-on proceeds.
IPOs by Indian issuers saw the busiest annual period since 1996 as number of IPOs grew 56 per cent from a year ago, with at least 236 small-to-mid sized listings raising $ 6.8 billion, a 11% decline in proceeds.
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