India Inc records 131 Deals At $4.1 Billion in August 2022, 40% Decline YoY: Grant Thornton Bharat

India Inc in August witnessed a 40 per cent year-on-year fall in deals to 131 valued at $4.1 billion. When compared with July 2022, while the deal volumes witnessed a 23 per cent decline, the values more than doubled due to two deals that were valued at over $1 billion, according to a report by Grant Thornton Bharat.

“India has overtaken the UK to become the fifth-largest economy in the world and its position is expected to improve in the years to come due to steady economic growth. According to Grant Thornton Bharat Dealtracker Report August 2022, the deals landscape echoed the same growth sentiment, with India Inc recording 131 deals valued at USD 4.1 billion last month,” Grant Thornton Bharat said in a statement.

Shanthi Vijetha, partner (growth) at Grant Thornton Bharat, said, “The Indian economy expanded at the fastest pace this year in August, supported by the RBI’s increased focus on taming inflation fuelled by consumption. August 2022 recorded 131 deals valued at $4.1 billion. This was 40 per cent lower in terms of deal volumes compared with August 2021 and 52 per cent lower in value (partly due to non-disclosure of values in most M&A deals).”

Vijetha added that the downtrend in deal activity appears to be due to the cautious approach of buyers and investors in committing large capital, given the global macroeconomic scenario and capital market conditions. “Hence, the absence of large ticket transactions and instead, the deal activity is dominated by the early-stage companies, where the ticket sizes are low.”

Merger and acquisition (M&A) deals recorded 21 deals valued at $1.5 billion. This segment witnessed a contrasting trend during the month. While the volume saw a significant downtrend, deal values were up by 79 per cent, owing to the JSW Energy and Mytrah Energy deal ($1.3 billion).

Barring this deal, the deal values declined by 73 per cent. M&A deal volumes at 21 marked the second-lowest monthly volumes recorded since 2011. In line with previous months, the M&A activity was dominated by domestic consolidations, which constituted more than three-fourths of M&A volumes and 98 per cent of values. With 14 per cent of deal volumes each, the start-up and IT sectors continued to dominate the segment.

Private equity (PE) investments recorded $2.5 billion across 110 deals. Deal volumes at 110 were the lowest monthly number recorded since May 2021. The decline in PE funding was largely due to the absence of large investments. While August 2021 recorded 18 high-value investments, August 2022 saw only four such investments, thereby witnessing a 67 per cent fall over August 2021. The start-up sector continued to drive the PE deal volumes for August 2022 with a 64 per cent share of PE volumes and investment values of $0.3 billion.

The retail tech segment led the investment volumes in the start-up sector with 24 per cent deals, followed by fintech with 16 per cent sector volumes. With $33.5 million Series-E2 funding, Shiprocket, an automated shipping tool for e-commerce became the latest entrant in the much-coveted unicorn club.

During the year-to-date 2022, there were 19 initial public offerings (IPO) recorded with an issue size of $6.2 billion (second-highest YTD values) as compared with 38 IPO issues, raising $9.7 billion in YTD 2021.

Qualified institutional placement (QIP), on the other hand, saw nine issues raising $933 million (the lowest value raised since YTD 2015) as compared with 27 issues raising $5.2 billion over YTD 2021. Both IPO and QIP activities continued witnessing a fall in fund-raising via respective routes over the last year.

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