M&A deals plummet to $70.9 bn in 2023, down 63% from previous year's high

Statistics collated from Bloomberg show that M&A deal values have crossed the $100 billion mark since 2018

Merger and acquisition (M&A) investment bankers are going home with lower bonus cheques as deal value fell 63 per cent to $70.9 billion compared to 2022 when India Inc signed M&As worth $192 billion.

The sharp rise in M&As in 2022 was mainly attributed to the mega merger between HDFC and HDFC Bank.

Data collated from Bloomberg shows that M&A deal value has crossed the $100-billion mark since 2018. This came as Indian companies and private equity firms acquired or sold companies in India despite Covid.

But in 2023, it slowed down considerably despite a record rise in stock indices

Mehul Bheda, partner, Dhruva Advisors, said M&A activity was subdued possibly due to the funding winter for startups.

“On the listed space, markets have gone up significantly, leading to mismatches in valuation expectations. There was also a bit of wait and watch due to the impending general elections, some of which is clear now due to better-than-expected performance of the BJP in the Assembly elections. It points to a similar mandate in the general elections in May 2024, signifying policy stability and continuity,” he said.

The Adani group, which was acquired by Ambuja Cements for $6.5 billion in 2022, made smaller acquisitions this time as it grappled with an unsubstantiated report by a US-based short seller. The group made a strong comeback, acquiring Sanghi Cement and Haifa Port in Israel for $1.2 billion. 

Among other major conglomerates, the Aditya Birla Group’s Ultratech announced plans to buy Kesoram Industries for Rs 5,379 crore in an all-stock deal. The largest transaction this year was the stake acquisition in Renew Power by Canada Pension Plan Investment for $4 billion. 

Bankers said the outlook of M&As in India in 2024, especially in the second half (after the general elections), seems relatively better.

Anurag Sud, managing director (MD), head of India at Apax Partners, a US-based private equity firm, said as one of the fastest growing large economies, India continues to offer attractive investment opportunities for PE firms for acquisitions next year. 

“Any bet on India is a bet on its growing digitisation trend. Companies are betting big on premiumisation and low penetration, which will aid the next leg of growth. Long-term macro indicators, such as healthy GDP growth and rising per capita income, will lead to higher discretionary spend. This will further aid the growth of companies in the country. Taken together, we believe technology services / software, healthcare, and digitally-backed global consumer brands will do extremely well in the coming years in India,” Sud said. 

A similar trend was observed in the rest of the world.

A total of 48,953 deals (M&As, private equity and venture financing) were announced globally during January-November 2023. This is a year-on-year (Y-o-Y) decline of 23.6 per cent compared to 64,092 such deals during the previous year, according to GlobalData, a data analytics company.

An analysis of GlobalData’s financial deals’ database reveals that all the deal types under the coverage recorded considerable Y-o-Y decline during January-November 2023. And, December is going to be a dull month for dead making.