Deals at India Inc. have slipped 54 per cent year-on-year (YoY) in terms of value in the month of February as per Grant Thornton’s Bharat Deal Tracker. The report noted that the total number of deals came down to 89 and were valued at $1.8 billion, 60 per cent lower year-on-year.
Shanthi Vijetha, Partner- Growth at Grant Thornton Bharat, noted that the decline in number of deals could be due to the global macroeconomic recessionary fears.
“US economic data has been pointing towards a slowdown; however, the recession is not confirmed yet. China has seen an accelerated reopening, and that has provided a boost to the commodity market,” she explained.
As per the report, breakout of each type of reports stood at:
1. Mergers and acquisitions:
Mergers and acquisitions deal activity witnessed a downtrend both in terms of deal volumes, down 48 per cent, and valuation, which is down 47 per cent. The total deals stood at 24 and valuations at $755 million compared to February 2022.
The report noted that the start-up sector led the volumes with 25 per cent of the deals, driven by the fintech segment, which dominated in terms of both volumes as well as values. The pharma, healthcare and biotech, and IT and ITeS sectors followed the start-up sector with 17 per cent and 13 per cent of deals, respectively.
2. Private equity:
Private equity investment trends also witnessed a drop both in terms of deal values and volumes as compared to February 2022, recording only 65 deals worth $ 1 billion. The month recorded the lowest monthly deal volumes and values since August 2020. The decline in PE funding was largely due to uncertain market conditions. Start-up sector continued to top the deal chart with 60 per cent of all deals in this category.
3. IPOs:
Year-to-date 2023 recorded one initial public offer (IPO) with an issue size of $8 million, compared to three IPO issues, raising $1 billion in year-to-date in 2022.
Despite the fall in number of deals, Vijetha is still optimistic on India's potential. She said, "While the deal activity is subdued, the Indian market is still considered to provide good opportunities for deals/investments. As a result, the Union Budget 2023 avoided populist measures in the pre-election year and prioritised long-term growth."
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