Journalism of Courage
Amid macroeconomic uncertainties, India Inc registered a 60 per cent decline in values of deals in the month of February 2023, according to Grant Thornton Bharat’s Dealtracker report. Indian companies recorded only 89 deals, valuing $1.8 billion. This translated to a 54 per cent decline in volumes and a significant 60 per cent decline in values compared to February 2022 as investors continued treading cautiously amid macroeconomic uncertainties. This also marked the second-lowest deal volumes and lowest values recorded since 2014.
The report showed that M&A value was dominated by cross-border deals, especially outbound transactions, on the back of one big-ticket transaction of $578 million in February. However, in terms of volumes, M&A deals continued to remain dominated by domestic consolidations accounting for 67 per cent of transactions, the Grant Thornton report showed.
The report added that the start-up sector led the M&A volumes with 25 per cent of the deals, driven by the fintech segment, which dominated in terms of both volumes as well as values. It was followed by pharma, healthcare and biotech, and IT and ITeS sectors sector with 17 per cent and 13 per cent of deals, respectively.
The automotive sector drove the values on the back of SAS Autosystemtechnik’s acquisition by Motherson International for $578 million. The deal contributed 77 per cent of the total M&A values, making it the fifth-largest deal in this sector in the last 12 years, the report stated.
The private equity (PE) investment also witnessed a drop both in terms of deal values and volumes over February 2022, as there were only 65 deals worth $1 billion. February saw the lowest PE deal volumes and values since August 2020.
The decline in PE funding was largely due to uncertain market conditions and the wait-and-watch approach adopted around the Union Budget 2023-24, the report said.
The start-up sector continued to top the deal chart with 60 per cent of total PE deal volumes. The retail tech saw increased activity, followed by enterprise application and edtech segments, which together contributed to 54 per cent of the start-up sector volumes.
Meanwhile, the e-commerce sector led the PE values in February on the back of three big-ticket fundings, which were all at and above $100 million. It also saw the largest-ever Series A round by an Indian insurtech company, InsuranceDekho, which raised $150 million. The transaction alone accounted for 38 per cent of the sector’s values, the report added.
There was a major decline in deal volumes as well as values year-to-date (YTD) 2023, at 234 deals valued at $4.5 billion. This was a 46 per cent decline in overall volumes and 58 per cent in values over YTD 2022, the report added.
While the year saw a mix of domestic and cross-border deals across various sectors, the overall activity deteriorated. The year also witnessed the continued funding winter in terms of both PE deal volumes and values, the report added.
YTD 2023 witnessed one initial public offering (IPO) with an issue size of $8 million, compared to three IPO issues, which raised $1 billion in YTD 2022, the report added.
Meanwhile, qualified institutional placement (QIP) saw muted activity compared to two issues raising $264 million over YTD 2022, the dealtracker report stated, and added that both IPO and QIP activities continued witnessing a decline amidst volatile markets.
