India Inc recorded only 450 deals worth $10.2 billion during the third quarter of 2022, the second-lowest quarterly values seen in the past five years. The July-September 2022 quarter recorded three deals valued over $1 billion, 10 deals valued between $100 and $999 million, and 15 deals valued between $5 and $99 million, according to a report by Grant Thornton Bharat.
It added that the merger and acquisition (M&A) space recorded $4.7 billion across 79 deals this quarter. While this space continued to be dominated by domestic consolidation, there was a 25 per cent decline in domestic deals from 82 deals in Q3 2021 and Q2 2022 to 60 deals in Q3 2022.
“This translates into a 30 per cent decline in overall M&A volumes and a massive 62 per cent decline in overall values when compared to Q3 2021. Further, the fall in the deal activity was also due to the lowest cross-border activity recorded for the Q3 period since 2011, valued at $596 million, marking the lowest deal values for the period mentioned above. Non-disclosure of deal values also added to the lower deal values,” said the report, titled ‘Grant Thornton Bharat’s Dealtracker September 2022’.
On the sector front, the start-up sector led the deal volumes, accounting for 27 per cent of M&A volumes for the quarter. Deal volumes stood at 21, which is a 36 per cent decline in deal volumes compared to Q2 2022 and a 30 per cent decline compared to Q3 2021. Retail tech led the sector volumes, followed by edtech, fintech and travel, transport and logistics segments. IT, retail and e-commerce sectors also remained active, recording 35 per cent of M&A deals.
Shanthi Vijetha, partner (growth) at Grant Thornton Bharat, said, “Two Black Swan events — pandemic and the Russia-Ukraine geopolitical conflict — have sparked inflationary conditions and significantly weighed on growth. Even as the outlook for global growth remains clouded by uncertainties, domestic growth is expected to hold up in the coming months.”
Vijetha added that a shift in policy focus towards infrastructure, manufacturing, land, labour reforms, financial services sector could cumulatively contribute to an upswing in the private sector.
Private Equity Investments
Private equity investments recorded $5.4 billion across 371 deals. PE investments also witnessed declined activity in terms of investment volumes (24 per cent) and investment values by 69 per cent. A significant fall in the values was due to a sharp decline in the number of high-value investments. While Q3 2022 witnessed only nine deals valued at and over $100 million each, Q3 2021 saw two deals valued over $1 billion and 34 deals valued at and over $100 million.
The start-up sector occupied the larger share of volumes with 68 per cent, dominated by investments in retail tech companies, followed by fintech and enterprise applications and infrastructure segments. The quarter witnessed top deals across diversified sectors ranging from start-up, banking, energy, infrastructure, education, pharma and e-commerce, which accounted for about 90 per cent of the PE deal values. The third quarter of 2022 also saw the birth of four unicorns — Onecard, Molbio Diagnostics, Tata 1mg, and Shiprocket.
IPO and QIP Landscape
The July-September 2022 period witnessed a 78 per cent decrease in IPO activity and a 92 per cent decline in issue size compared to Q3 2021. This quarter saw only four IPOs closed in the month of August and September. Similarly, QIP fundraising witnessed four issues raising USD 326 million. While this was a 43 per cent and 68 per cent decline in volumes and issue size compared to Q3 2021, it saw a 33 per cent and 139 per cent increase in volumes and issue size compared to Q2 2022.
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