India inc on deal spree; signs 1,149 deals worth over $104.3 bn in 2022 first half

There is a significant 34 per cent increase in the deal volume, while deal values more than doubled with 143 per cent increase

India deal signs deal worth $104.3 bn

India Inc signed 1,149 deals valued at $104.3 billion in the first half of this year, amid global uncertainties, and the country saw $6 billion from 17 IPOs — the highest values raised in the first six months, a report showed on Thursday.

The figures represent a significant 34 per cent increase in the overall deal volumes, while deal values more than doubled (with a 143 per cent increase) from the same period last year, according to the Grant Thornton Bharat Dealtracker report.

Driven by HDFC Bank and HDFC Ltd’s $40 billion merger, LTI and Mindtree merger ($17.7 billion) and Adani Group-Holcim Ltd’s $10.5 billion deal, M&A deal values recorded an over two times increase over H1 2021.

These three deals alone accounted for 86 per cent of the total M&A deal values in H1 2022.

“Amid macro-economic stress, the overall deal sentiment for 2022 is expected to continue given the support from the government on infrastructure spending, supply-side response and key fiscal measures,” said Shanthi Vijetha, Partner, Growth, Grant Thornton Bharat.

“However, corporates and more importantly PE/VCs may employ a cautiously optimistic approach as the impact of the global economic slowdown on the Indian economy becomes evident,” Vijetha added.

While private equity deal activity continued to dominate total deal volumes with 3/4th share, deal values were driven by mergers and acquisitions with 76 per cent of the total deal values in H1 2022.

Startup, e-commerce and IT sectors led deal activity in H1 2022, driving 76 per cent of all deals followed by retail, education and pharma sectors.

The M&A space witnessed a significant increase in the first half, witnessing 284 deals while representing a 27 per cent growth over H1 2021.

The banking and financial sector had the highest contribution of 53 per cent in terms of overall deal value in H1 2022, followed by IT and manufacturing sectors.

The private equity and venture capital investments saw record volumes and values in the first six-month period with 865 deals at $25.1 billion.

However, there was a 12 per cent and 15 per cent decrease in investment volumes and values over H2 2021 (the preceding six months), the report noted. “The drop in the deal values is due to a fall in big-ticket investments coupled with prevailing factors including geopolitical tensions, stock market volatility, concerns about the rise in commodity prices and the impact of inflation,” the report noted.

Nevertheless, large funds like Tiger Global, Westbridge, Baring PE, TPG, Brookfield, Blackstone and Warburg Pincus, among others, continued to keep pace with their activity.

The start-up space attracted the most investment at $5.1 billion across 550 deals, recording a growth of 69 per cent in deal values.

Meanwhile the fall in rupee against the US dollar will be pinching the Indian parents and their wards studying and aspiring to study in that country, said experts and parents.

Also Read: ‘Rupee could break Rs 80 mark against dollar next week’

They also said students can look at other countries to pursue their education as the currencies that rupee is appreciating.

The rupee has been depreciating against the dollar in recent times and touched an all time low of 80.05 against a dollar giving jitters to the parents whose wards are studying in the US as well as the aspirants for an US university degree.

The reason? The parents have to pay more rupees to buy a dollar and their wards studying in the US have to tighten their belts.

“Our daughter tightened her spending while studying in the US as we bought dollars and sent her. During her study time too the dollar appreciated,” V Revathi, a retired banker told IANS.

“The major reasons for the weakening of Indian Rupee against the US Dollar are global factors that include Russia-Ukraine war, rising crude oil prices, tightening of global liquidity and significant FII outflows,” Arun Kumar, Head of Research, FundsIndia had said.

The impact of dollar appreciating against rupee are: imports, overseas travel, US education and others getting costlier while exporters can laugh their way to their banks.

While students can look at other destinations for studies, there are issues of getting a job in those countries unlike in the US.

It is not only the parents whose wards are studying in the US who are worried, but also parents of children who have taken up some employment and are waiting for a relevant visa to continue to stay there.

“My daughter has completed her education and has taken up a job-sort of on the job training. She has taken an education loan in dollars and is paying it back. The worry now is, if she doesn’t get the required visa to stay put in the US, she has to come back. Then the loan repayment will be an issue,” V Rajagopalan, a private sector employee told IANS.

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