With a 38% jump, India's M&A activity touched all-time high in 2022

Outbound M&A activity increased 31.6% year-on-year to hit $9.8 billion

At $170.6 billion, merger & acquisition (M&A) deals in India during 2022 were the highest ever, shows Refinitiv's India Investment Banking Review 2022 report. The deal activity in 2022 was 38 per cent higher than that in 2021.

The financial sector came on top of the list of target sectors, receiving investments of over $70 billion – more than the next four sectors combined. Technology was the next most favoured sector, with investments of $20.4 billion.

HDFC Bank's merger with Housing and Development Finance Corp, valued at $60.4 billion, was the biggest deal by book value.

"With the result of macroeconomic factors including the war in Ukraine, inflationary pressures, and rising interest rate – all of which had an impact on market sentiment, valuations and the cost of debt financing deals, overall deal-making activity involving India has witnessed a slow start and totalled $6.6 billion so far this year, a 73.7 per cent decline compared to the same period last year, while the number of deals fell 3.17 per cent year-on-year (YoY)," said Elaine Tan, Senior Analyst at Refinitiv.

Capital raised through equity markets

Capital raised by companies through the initial public offering (IPO) and follow-on public offering (FPO) routes stood at $19.4 billion in 2022. Capital raised through IPOs saw a sharp decline of 55.3 per cent year on year, even as the number of IPOs increased 23.8 per cent. Life Insurance Corporation raised $2.7 billion, the highest amount raised in equity markets in 2022.

International M&A activities

Outbound M&A activity increased 31.6 per cent over a year earlier to reach $9.8 billion. The segment was fuelled by Biocon Biologics' $3.3-billion acquisition of Viatris Inc's US-based Biosimilars Company, which was the largest Indian outbound acquisition ever in US healthcare. While the inbound M&A deals stood at $38.7 billion, the number fell 40.5 per cent year on year.

"M&A activity across domestic and cross-border transactions slowed down. Inbound M&A activity was down 85 per cent from a year ago, and outbound M&A deals were 61 per cent lower YoY. Private equity-backed deals which saw record levels in 2021 and 2022, also started slow this year and reached $2.2 billion to date, down 75 per cent from a year ago. There are also no deals bigger than $1 billion involving India so far this year. With all the headwinds, we are seeing a big pullback in M&A activity compared to last year."

The story so far in 2023

The industrial sector is leading the pack in terms of M&A deals in 2023 by deal value. Deals worth over $2 billion have taken place so far. The biggest deal this year has been the Samvardhana Motherson Automotive Systems Group acquiring the German firm SAS Autosystemtechnik. The financial sector, the second most favoured target sector, has raised just under $1.5 billion this year.