Business Standard

Tech drives India's M&A market in first half of 2024: Top 10 deals decoded

Majority of the deal making activity involving India targeted the High Technology sector which totaled $5.8 billion, a 13.2% increase in value from the comparative period last year.


Sunainaa Chadha NEW DELHI
India's mergers and acquisitions (M&A) activity witnessed a mixed performance in the first half of 2024, with deal value rising slightly but the number of deals declining significantly compared to the same period last year. This trend is mirrored in the investment banking sector, where overall fees dropped despite a surge in equity capital market (ECM) underwriting fees.

M&A Activity: Value Up, Volume Down

While the total deal value for announced M&A deals involving India reached $37.3 billion in the first half of 2024, a 4.4% increase year-on-year, the number of deals dropped by 18.4%. This decline was particularly pronounced in the mid-market segment (deals valued up to $500 million), which saw a 19% decrease in deal count, representing the slowest activity since the first half of 2021.

However, there were bright spots. The first half of 2024 saw at least six deals exceeding $1 billion, including the high-profile $3.1 billion merger between Walt Disney and Reliance Industries' media assets and the $3.0 billion merger between Data Infrastructure Trust and ATC India.

Breaking Down the Deals:
  • Domestic M&A: $17.2 billion (down 8.8% year-on-year) - This indicates a slight decrease in consolidation within the Indian market.
  • Inbound M&A: $17.2 billion (up 32.4% year-on-year) - This significant rise shows increased foreign investor interest in Indian companies. The United States was the most active acquirer in this category.
  • Outbound M&A: $2.7 billion (down 29.0% year-on-year) - This sharp decline suggests Indian companies are taking a more cautious approach to overseas acquisitions.

Indian-involvement deals targeting Technology, Media & Entertainment, and Telecommunications (TMT) sector reached $14 billion, more than double the deal value announced during the same period last year.  This growth reflects India's strong economic fundamentals, government initiatives promoting digitalization, and the attractiveness of the Indian market for tech-related businesses.

Here are the top deals in the first half of 2024: 

Media and Technology Dominate: The top two deals involve companies in the Media and Entertainment (Star India) and Telecommunications (ATC Telecom Infrastructure) sectors
Mix of Domestic and International Deals: The table includes both domestic deals (Indian companies acquiring other Indian companies) and inbound deals (foreign companies acquiring Indian companies). This reflects the growing participation of foreign investors in the Indian market.

Equity Capital Markets Boom

India's equity capital markets performed exceptionally well during the first half of 2024. Equity fundraising reached record levels, with companies raising $29.5 billion in proceeds, more than double the amount raised in the same period last year. This boom was driven by a significant increase in follow-on offerings (FPOs) and block trades. FPO proceeds grew by 156% year-on-year, while block trades raised $16.4 billion, a 117% increase. IPO activity also saw positive growth, with Indian companies raising $4.4 billion, up 98% from the first half of 2023.

Investment Banking Fees: A Mixed Bag

While the overall investment banking fee pool in India declined by 11% compared to the first half of 2023, ECM underwriting fees surged by 127%, reaching the highest first-half total since 2007. This rise reflects the activity in the equity capital markets. However, fees from other segments, such as Debt Capital Markets (DCM), syndicated lending, and M&A advisory, experienced significant declines. Here's a breakdown of the investment banking fee landscape:

  • Total Fees: $530.4 million (down 11% year-on-year)
  • ECM Underwriting Fees: $243.8 million (up 127% year-on-year)
  • DCM Underwriting Fees: $114.9 million (down 22% year-on-year)
  • Syndicated Lending Fees: $80.8 million (down 51% year-on-year)
  • M&A Advisory Fees: $90.8 million (down 47% year-on-year)
  • Kotak Mahindra Bank emerged as the top player in investment banking fees, with a total of $40.6 million, capturing a 7.6% share of the Indian market.
"Majority of the deal making activity involving India targeted the High Technology sector which totaled $5.8 billion, a 13.2% increase in value from the comparative period last year and accounted for 15.6% market share. Industrials totaled $5.0 billion, down 26.1% from the first half of 2023, capturing 13.6% market share. Financials rounded out the top three sectors with 11.9% market share. Telecommunications and Media & Entertainment with 11.4% and 10.8% market share, respectively, saw significant triple-digit percentage growth from a year ago," said  Elaine Tan, Senior Manager at LSEG Deals Intelligence.

Private equity-backed M&A in India amounted to $5.7 billion, down 33.7% from a year ago, and the lowest first half total since 2020.


Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Jul 10 2024 | 1:31 PM IST

Explore News