PwC India expects rise in small, mid-size merger & acquisition transactions

PwC India anticipates an upswing in the India markets, especially in small to mid-size M&A (merger and acquisition) transactions and growth fundings driven by increasing investors' confidence.

The year 2023 witnessed the emergence of a nuanced M&A landscape, with investors showing interests in diverse strategies and larger-scale ventures, even amid an overall decrease in PE investment, said Sanjeev Krishan, Chairperson, PwC in India.

While PE deals were higher in volume, strategic deals dominated the top deals -- and domestic deals with group-level consolidations were a prominent theme. The first quarter of 2024 marked a resurgence in deal value and volume.

According to a PwC report, top 10 deals of 2023 included JV buyouts, strategic investments, PE buyouts, and stock mergers, and contributed to 21 per cent of the total deal value. While PE deals were higher in volume overall, strategic deals dominated the top deals with domestic deals and group-level consolidations as a significant theme.

"On a sectoral basis, traditional sectors including retail and consumer and healthcare and pharmaceuticals are in the lead. We anticipate an upswing in the India markets, especially in small to mid-size M&A transactions and growth fundings," Krishan told PTI.

He was responding to a query on the changing landscape of M&A in India.

The optimism around M&A, he said, is based on three key factors -- the improving financial markets indicate an increase in investor and CEO confidence; deal-making has reached an inflection point with pent-up buyer demand and a build-up in seller assets; and accelerating global megatrends have created a need for firms to reinvent their business models, which can be accelerated through M&A.

According to Krishan, sectors like e-commerce, healthcare and biotechnology, renewable energy, EVs and EV infrastructure, infrastructure, banking, financial services and insurance, IT services, and technology (including AI & semiconductors) show exciting prospects.

"Going forward, we could expect a shift towards growth funding and a possible venture capital revival. We could also see an increase in controlling stake deals, and a rise in portfolio exits through capital markets and IPOs," he said.

In keeping with the transformation trend, the same might be visible with PE operating models as well -- increased buyouts, platforms and bolt-ons, as well an increased focus on sustainability and ESG integration, he added.

On PwC's expansion plans in India, Krishan said each of the service lines -- advisory, assurance and tax -- has grown and recorded a CAGR (compound annual growth rate) in the range of 20-25 per cent.

"We are also making changes in how we operate to ensure that we are better aligned to India's 'Viksit Bharat' agenda and contribute to it in a meaningful manner," he said.

In terms of headcount, he said the current size stands at 27,000 people across India, including around 700 partners.

Krishan further said PwC India has been focusing on bringing in talent across key areas including transformation, emerging technologies, GCC, ESG, risk, and deals.