The recent month of July 2022 saw sharp decline in M&A deal value as well as PE investments in India at $ 2 billion, down 85 per cent compared to July 2021. The deal volume declined 7 per cent to 171 in July 2022 on a year-on-year basis, the latest Grant Thornton Bharat deal tracker showed.

When compared with June 2022, the deal volumes witnessed 7 per cent growth while values decreased by 78 per cent due to absence of big-ticket transactions. June 2022 saw one deal in the billion-dollar category and 11 high-value deals (over $ 100 million) compared to only four such transactions recorded in July 2022, according to Grant Thornton Bharat.

While the overall picture for July 2022 may be disappointing, the overall year to date performance of M&As and PE investments put together witnessed a 27 per increase in deal volumes with deal values almost doubling to $ 106 billion, the report showed.

Commenting on the data, Shanthi Vijetha, Partner, Growth, Grant Thornton Bharat said, “Like many other countries, Asia’s third-largest economy has also been grappling with soaring inflation, aggravated by rising commodity prices. A weaker rupee has further bumped up imported inflation. Nevertheless, start-up, e-commerce and IT led the deal volumes for the month, while infra, pharma, retail and banking sectors topped the overall value. The month saw the birth of only one Unicorn, Onecard, in the fintech segment.”

Mergers and acquisitions (M&A) landscape

M&A deals witnessed significant downtrend in July 2022 on a year-on-year basis both in terms of deal volumes, by 14 per cent, and deal values, by 95 per cent, at $ 280 million for 32 deals for the month under review. 

In line with previous months, M&A activity in July 2022 was dominated by domestic consolidations, which constituted 84 per cent of M&A volumes and 92 per cent of values. 

While M&A deal activity saw an uptick in deal volumes compared to June 2022, which saw the lowest monthly volumes in the last 19 months, the deal values saw a decline due to lack of high-value transactions and non-disclosure of values in the majority of the deals.

Cross-border transactions in July 2022 recorded the second lowest, both in terms of deal volumes and values in last 12 months owing to global tensions. With 28 per cent of M&A deal volumes each, the start-up and IT sectors continued to dominate deal activity with nine deals each cumulatively valued at $ 162 million.

Private equity (PE) landscape 

The PE landscape saw 139 deals valued at $ 1.7 billion in July 2022. While PE transactions continued to account for over 80 per cent of overall deal activity, deal values witnessed a significant decline. 

The decline in funding was largely due to the absence of large investments and higher volume of deals in the early-stage category, resulting in lower value per deal, according to Grant Thornton Bharat.

Year-to-date PE investments witnessed record activity both in terms of volumes and values with 29 per cent and 3 per cent from the previous record, respectively. 

The start-up sector continued to drive the PE deal volumes for July 2022 with a 70 per cent share of volumes, with investment values of $ 0.6 billion. The retail tech segment led the investment volumes in the start-up sector with 20 per cent deals, followed by enterprise application and infrastructure and fintech at 18 per cent each.

IPO and QIP landscape 

The year-to-date 2022 recorded 17 initial public offerings (IPO) with an issue size of $ 6 billion, compared to 28 IPO issues, raising $ 7 billion in YTD 2021. 

Qualified institutional placement (QIP), on the other hand, saw seven issues raising $ 677 million compared to 24 issues raising $ 4.4 billion over YTD 2021. Both IPO and QIP activity continue witnessing fall in the fund-raising activity via respective routes over last year.