ESG, technology theme to dominate India Inc acquisitions in 2024

Streamlined regulatory approvals, sector-specific incentives would encourage firms to write acquisition cheques

Top Indian companies are in talks for acquisitions in the new year, especially in the renewable energy, electric vehicle, and battery storage segments, as environmental, social, and corporate governance, and technology themes are expected to dominate corporate boardrooms in 2024, say bankers.
 

Vaibhav Gupta, partner at Dhruva Advisors, said top corporates want to focus on sustainability and clean energy companies, and hence large investments are expected in ramping up capacities in these fields. “Technology as a sector should continue to be in focus with the rapid advancements in Gen AI. A stable political regime post the elections should help in having continued global attention to India and keeping the mergers and acquisitions activity buoyant,” he said.
 

Top Indian companies like the JSW Group are currently in talks with China’s SAIC Motor to set up a joint venture to manufacture electric vehicles in India. Part of the EV business is expected to be demerged from MG Motor's current India business. Bankers say the Adani Group is also looking for acquisitions in the renewable energy sector as part of its $100 billion investment over the next ten years. Reliance and the Tata Group are also looking for acquisitions in the renewable energy sector, say bankers.
 

Bankers and advisors said mergers and acquisitions would remain resilient in 2024 - backed by government reforms fostering foreign investment and domestic mergers and acquisitions. Key measures like streamlined regulatory approvals, sector-specific incentives, and proactive initiatives by the Securities and Exchange Board of India would encourage companies to write acquisition cheques.
 

“The year anticipates a rise in control and take-private transactions, signalling a robust and dynamic mergers and acquisitions environment. These efforts underline India's commitment to a favourable business climate, attracting both Indian and international business leaders,” said Rabindra Jhunjhunwala, partner at Khaitan & Co.

In 2023, India had seen subdued mergers and acquisitions activity due to global issues like conflicts, geopolitical tensions, and US Federal Reserve rate volatility. “Indian businesses are proceeding cautiously with mergers and acquisitions and fundraising, especially with the approaching general elections in 2024. However, a rebound in mergers and acquisitions is anticipated, offering significant growth prospects for the Indian economy. Expectations for the upcoming budget aim to stimulate mergers and acquisitions activities in the near future,” said Maneesh Bhandari, founder and chief executive officer of Growthpal, a mergers and acquisitions deal-sourcing platform.

Last year, the software and infotech services space announced the maximum deals. Of this, 80 percent of the target companies were established in the past 15 years, per Growthpal statistics. Manufacturing and consumer goods, financial services, also witnessed good deal activity after the software and infotech services. “Though there was a drop in deal volume, deals in the previous year were also of larger sizes as compared to deals in 2023, being one of the reasons for the significant drop in deal value,” Bhandari said.