India Inc sees decline in deal volume, value in July-September 2022: Grant Thornton | Jobi Cool

India Inc recorded just 450 deals worth $10.2 billion in the third quarter of 2022, the second lowest quarterly value seen in the past five years. In the July-September 2022 quarter, there were three deals worth over $1 billion, 10 deals worth between $100 million and $999 million and 15 deals worth between $5 million and $99 million, according to a report by Grant Thornton Bharat.

It added that the mergers and acquisitions (M&A) space recorded $4.7 billion in 79 deals this quarter. While domestic consolidation continued to dominate this space, there was a 25 percent decline in domestic deals from 82 deals in Q3 2021 and Q2 2022 to 60 deals in Q3 2022.

“This translates into a 30 percent decline in total M&A volume and a massive 62 percent decline in total value compared to Q3 2021. Furthermore, the decline in deal activity was also due to the lowest cross-country activity on record for Q3 since 2011, valued at $596 million, which is the lowest value of the contract for the period mentioned above. Non-disclosure of deal values ​​also contributed to lower deal values,” said the report, titled ‘Grant Thornton Bharat’s Dealtracker September 2022’.

On the sector front, the startup sector led the sales volume, accounting for 27 percent of communications and purchases during the quarter. Deal volume stood at 21, a 36 percent decrease in deal volume compared to Q2 2022 and a 30 percent decrease compared to Q3 2021. Retail technology led the sector’s volume, followed by edtech, fintech, and the travel, transportation and logistics segments. . Information technology, retail and e-commerce also continued, registering 35 percent of M&A deals.

Shanthi Vijetha, partner (growth) at Grant Thornton Bharat, said: “Two Black Swan events – the pandemic and the Russia-Ukraine geopolitical conflict – have created inflationary conditions and weighed heavily on growth. Even as the outlook for global economic growth remains clouded by uncertainty, domestic growth is expected to hold up in the coming months.

Vijetha added that a shift in policy towards infrastructure, manufacturing, agriculture, labor market reforms, financial services could cumulatively contribute to a boom in the private sector.

Private Equity Investments

Private equity investments totaled $5.4 billion in 371 deals. Investing in investments also witnessed declining activity in terms of investment volume (24 percent) and investment value by 69 percent. The significant decrease in value was due to a sharp decline in the number of valuable investments. In the third quarter of 2022, there were only nine deals worth over $100 million each, in the third quarter of 2021 there were two deals worth over $1 billion and 34 deals worth over $100 million.

The startup sector took the largest share of the volume at 68 percent, dominated by investments in retail technology companies, followed by fintech and enterprise applications and infrastructure segments. The quarter witnessed major deals across diverse sectors ranging from startups, banking, energy, infrastructure, education, pharma and e-commerce, which accounted for around 90 percent of the PE deal value. The third quarter of 2022 also saw the birth of four unicorns – Onecard, Molbio Diagnostics, Tata 1mg and Shiprocket.

The IPO and QIP Landscape

The July-September 2022 period witnessed a 78 percent decline in IPO activity and a 92 percent drop in issue size compared to the third quarter of 2021. This quarter saw only four IPOs close in August and September. Similarly, QIP fundraising witnessed four issues that raised USD 326 million. While this was a 43 percent and 68 percent decline in volume and issue size compared to Q3 2021, it saw a 33 percent and 139 percent increase in volume and issue size compared to Q2 2022.

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