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India Inc recorded only 119 deals worth $2.2 billion in November, a 40 per cent fall in deal volumes and a 37 per cent decline in deal values compared to November 2021.
November also marked the lowest monthly deal volumes in 2022. Interestingly, the month also saw the highest number of IPO listings in 2022, and the fourth highest in the last 11 years, which suggests that companies were waiting for the market to come up, which coincidently aligned with the Nifty 50 touching a lifetime high of 18,614.
Shanthi Vijetha, Partner- Growth at Grant Thornton Bharat, said, “Over the past six months, the global energy and food supply shocks emanating from the Russia-Ukraine war have intensified. The muted deal activity shows a significant drop in both the M&A and PE deals on the back of a cautious and conservative approach taken by strategic and financial investors, considering the prevailing global uncertainties. Nevertheless, both M&A and PE values were dominated by the energy and natural resources (cleantech) sector, showing the attractiveness of the segment for both strategic and financial investors. This signifies that there is a big opportunity in this sector.”
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The Budget estimated direct tax collection at ₹14.20-lakh cr this fiscal, higher than ₹14.10-lakh cr collected last fiscalFurther, mergers and acquisitions (M&A) activity witnessed a decline, both in the terms of deal volumes and values compared to November 2021, recording only 19 deals valued at $818 million, marking the second lowest monthly volumes till date. Volumes witnessed a significant decline by 62 per cent while values saw an uptrend at 88 per cent over November 2021.
Cross border activity
November 2022 also witnessed a sudden growth in cross-border activity, specifically the inbound M&A, which saw the highest monthly volumes recorded since April 2022, with investors from Singapore staying active in acquiring Indian targets. With 21 per cent of M&A deal volumes, the start-up sector continued to dominate the M&A deal activity.
In private equity (PE), almost $1.4 billion worth of investments were made across 100 deals (second lowest monthly volumes), marking a decline of 55 per cent and 32 per cent respectively, over November 2021. The start-up sector continued to drive the PE deal volumes for November 2022, with a 55 per cent share of volumes with investment values of $246 million.
The retail tech segment led the investment volumes in the start-up sector with 22 per cent deals, followed by fintech and enterprise application and infrastructure at 16 per cent and 13 per cent, respectively. The energy and natural resources sector led the values for the month on the back of one big-ticket transaction (the Serentica Renewables fund raise), making it the second largest deal done this year in this sector.
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Volume growth for FMCG sector, however, will be muted at 1-2%The YTD (year to date) 2022 deal volumes are on par with YTD 2021. This was due to higher activity witnessed in the first six months, thereby making YTD22 much better than YTD21. On the other hand, deal values saw a 47 per cent increase due to a couple of multi-million-dollar deals executed during the year, driven by a significant 135 per cent increase in M&A values.
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