M&A deals rise 26% to $99.9 bn in FY25 on increased PE investments

Experts expect big-ticket M&A transactions in FY26 despite global headwinds

Fuelled by private equity investments, mergers and acquisitions (M&As) in India rose by 26.4 per cent to $99.9 billion in the current financial year (FY25) in value when compared to $79.05 billion worth of deals reported in the last financial year.

 

According to industry executives, M&A activity is expected to remain buoyant in the new financial year beginning next week, driven by shifting investor sentiment, evolving deal structures, and changing market conditions.

 

So far in FY25, 3,103 transactions were signed as against 2,598 deals signed in FY24, according to Bloomberg data. The largest deal of the year was the $5.08 billion merger in the healthcare sector between Quality Care and Aster DM Healthcare.

 

While the deal volume has grown, the overall value remains below the highest-ever deal value reported in a year, which was three years ago between HDFC and HDFC Bank.

 

“Activity should accelerate due to the slowdown in capital markets and rationalisation in valuations, which many are reluctant to discuss openly. We may see more earn-out structures, deferred consideration, or the use of stock as acquisition currency,” said Bharat Anand, Senior Partner, Khaitan & Co, a leading law firm.  

Private equity investors are also adjusting their approach, shifting towards control-driven deals for greater operational influence in high-growth sectors.

 

Binoy Parikh, executive director at Katalyst Advisors, expects a move from minority stakes to control-based transactions in FY26, signaling stronger investor confidence in India’s growth story. “Indirect listings of high-growth unlisted companies through mergers with listed platforms may also emerge as a preferred strategy, offering a faster route to public markets versus an IPO,” said Parikh.

 

Private equity firms say they are ready to invest more in India via M&As as India is still reporting the highest economic growth in the world, fuelled by its rising population. 

 

“When we started investing, 95 per cent of deals were minority stakes. Over time, control-oriented investments have increased, and we have made repeated investments across sectors in technology, healthcare, consumer, and more,” said Amit Dixit, senior managing director, Blackstone, which plans to double its investments to $100 billion in India. 

 

Control investments now account for about $12 billion annually, or one-third of the overall $35 billion market, a rise from 5 per cent historically, said Dixit, adding that mature markets like Japan and Australia see over 80 per cent control investments, and India is moving in that direction.

 

Experts said corporate restructuring was expected to accelerate, with conglomerates hiving off business verticals to enhance valuation discovery and optimise capital allocation. The mandatory listing of upper-layer non-banking financial companies (NBFCs), including Tata Sons and Tata Capital, is seen as another major development, said Parikh.

 

Mohit Khullar, managing director at Alvarez & Marsal, said India is witnessing a variety of deal types. Mega mergers, driven by economies of scale and market expansion, are taking shape, including the Reliance-Disney and ACC-Ambuja deals. Another growing trend is the rise of private credit, which has become a significant asset class, with nearly $9–10 billion deployed in India last year. Founders and shareholders are increasingly open to this investment.

 

“In a strong year, we should see both value and volume growth. There should be bold investments and meaningful exits, with capital being invested and harvested through robust private markets. Ideally, we will witness a mix of transaction types, mega deals, distressed deals, growth deals, buyouts, and even IPOs of companies that have flipped back to India,” added Anand.

 

Despite strong deal momentum, global macroeconomic risks could shape M&A activity in the future. Citing trends in the US as a key factor, Anand noted that while the US market's dominance could crowd out M&A capital for the rest of the world, a potential recession in the US could slow deal-making. He also noted that China’s recent liberalisation of restrictions on private investments by non-state-owned firms could provide a boost to global private markets, making greater economic integration with China a consideration for policymakers.

 

Khullar identified geopolitical tensions as the biggest risk to deal-making, warning that trade uncertainties and high interest rates could dampen M&A activity. “The Indian GDP is expected to grow at over 6 per cent for the next two years, and less than 10 per cent of companies in India have ever availed private investment, if you put these two numbers combined, deal-making activity in India will remain strong despite risks,” he added.

 

Parikh highlighted legal and tax uncertainties, including Section 56(2)(x), which creates ambiguity in acquisitions, restrictions on the carry-forward of losses, and the lack of a clear framework for taxing deferred or milestone-linked payouts.

 

While core sectors such as healthcare and technology continue to see activity, new areas such as aerospace and defense have witnessed a surge in M&A, driven by 100 per cent FDI approval and the ‘Make in India’ initiative. Khullar said that over 20 deals have been recorded in this sector in the past two years.

 

Sustainable energy and power utilities are also emerging as key sectors, fueled by increasing ESG focus and rising deal volumes. The growth challenges include a complex tax system, different regulations of states and the Central government, and corruption, said the head of a top private equity firm, wishing not to be named.