India Inc saw a drop in deal value in July to $2 billion due to lack of high-value deals and non-disclosure of values in majority of deals, with 171 M&A (merger and acquisition) deals and PE (private equity) venue, according to a report by Grant Thornton Bharat. However, trading volumes have seen a 27% jump so far this year, with values nearly doubling to $106 billion.
“While M&A deal activity saw an increase in deal volumes compared to June 2022, which saw the lowest monthly volumes in the past 19 months, deal values have seen a decline. due to the lack of high value transactions and non-disclosure of values in the majority of transactions.On the other hand, YTD 2022 (year to date 2022) saw a 27% increase in transaction volumes with values that nearly doubled to $106 billion,” according to the Grant Thornton Bharat Dealtracker report.
Shanthi Vijetha, Partner (Growth) at Grant Thornton Bharat, said: “Like many other countries, Asia’s third-largest economy is also grappling with runaway inflation, compounded by rising commodity prices. A weaker rupee further inflated imported inflation. Nonetheless, start-ups, e-commerce and IT led transaction volumes for the month, while infra, pharmaceutical, retail and banking sectors led overall value. The month saw the birth of a single unicorn, OneCard, in the fintech segment.
The report says M&A deals trended significantly downward both in terms of deal volumes by 14% to $280 million and deal values by 95% to 32 deals in July 2022. Consistent with previous months, M&A activity was dominated by domestic consolidations, which made up 84% of M&A volumes and 92% of values.
“Cross-border deals recorded the second-lowest in both deal volumes and values in the last 12 months due to global tensions. With 28% of M&A deal volumes each, the sectors start-ups and IT continued to dominate deal activity with nine deals each worth a cumulative $162 million,” he said.
The PE landscape saw 139 deals valued at $1.7 billion. While private equity deals continued to account for more than 80% of overall deal activity, the value of deals declined significantly. The decline in funding was largely due to the lack of significant investments and a higher volume of deals in the early stage category, resulting in a lower value per deal.
Year-to-date private equity investments saw record activity, both in terms of volumes and values, at 29% and 3% respectively from the previous record. The start-up sector continued to drive private equity deal volumes for July 2022 with a 70% volume share, with investment values of $0.6 billion. The retail technology segment led investment volumes in the start-up sector with 20% of transactions, followed by enterprise applications and infrastructure and fintech with 18% each.
So far this year has also seen 17 initial public offerings (IPOs) with an issue size of $6 billion, compared to 28 IPO issues, raising $7 billion since the start of the year. 2021. Qualified Institutional Placement (QIP), on the other hand, saw seven issues raising $677 million versus 24 issues raising $4.4 billion since the start of 2021. IPO activity and QIP continue to see a decline in fundraising activity through respective channels over the past year.
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