Number of deals fell 40% in Aug, M&A volume worst since May 2020: Report

Value of deals down 52% y-o-y as investors turn cautious, says study by Grant Thornton Bharat

Investments slowed down in India in August when the number of deals reduced by more than 40 per cent year-on-year (y-o-y), said a report on Thursday. There were 131 deals in August 2022, compared to 219 in August 2021.

"The downtrend in deal activity appears to be due to the cautious approach of buyers and investors in committing large capital, given the global macroeconomic scenario and capital market conditions. Hence, the absence of large ticket transactions," said Shanthi Vijetha, partner of growth at Grant Thornton Bharat, which publishes the monthly Dealtracker report 

The value of the deals was 52 per cent lower y-o-y. This August, the value was $4,076 million. In August 2021, it was $8,439 million.

Considering the number of merger and acquisition (M&A) deals, this was the worst month since May 2020.

M&A deals were down 43 per cent (YoY) in volume but 79 per cent higher in terms of value. Private equity (PE) deals saw a fall of 40 per cent in terms of volume and 67 per cent in terms of value.

The biggest M&A deal in August was JSW Energy acquiring Mytrah Energy (India) for $1,316 million. "This is not only the largest deal by JSW but also the largest deal in the energy sector since January 2021," the report said.

The energy sector led the M&A deal activity by value and the start-up and the IT sector led by volume, recording 3 deals each.

Private equity (PE) investments in August fell 40 per cent (YOY) in volume and 67 per cent (YOY) in value.

"The decline in PE funding was largely due to the absence of large investments. While August 2021 recorded 18 high-value investments, August 2022 saw only four such investments, thereby witnessing a 67 per cent fall over August 2021," the report said.

The biggest PE deal of the month was the sale of a 20 per cent stake in the YES Bank by the Carlyle Group and Advent International for $1,100 million.

The start-up sector led the PE deal by volume in August.  

The report said that the number of initial public offerings (IPOs) was down 50 per cent year-to-date (YTD) AT 19. The number of qualified institutional placement (QIP) deals were down over 66 per cent (YTD) to 9.