The year 2018 was a record-breaking year for deal activities in India, with M&A and private equity deals at $110 billion in deal values from over 1,250 transactions. M&A transactions were the growth front runners with deals totalling $90 billion and PE reporting deals of $20 billion, according to a study by Grant Thornton.
“The ongoing capital market and regulatory reforms, constant amendments to reforms like Goods and Services Tax (GST), Real Estate Regulatory Authority (RERA), Insolvency and Bankruptcy Code (IBC), and efforts to improve ease of doing business in the country are signs of increasing depth and maturity, making the Indian markets more attractive,” Prashant Mehra, Partner at Grant Thornton India said.
“Furthermore, the surge in the M&A deal activities was mainly driven by the objectives of consolidating by expanding the market share, buying technology and diversifying market presence. Additionally, M&As have also proven to be effective in bridging the gaps in the market, resource and the growth outlook among business partners,” he added.
While sectors such as telecom, e-commerce, energy, manufacturing, retail and agriculture contributed to high-value deals, start-up, IT, pharmaceuticals, banking and media sectors attracted the maximum deal activities driving deal volumes in 2018. PE deal activity remained muted as compared with 2017 with marginal growth in deal volumes. While start-ups relished big ticket investments; BFSI and e-commerce were fuelled with small ticket investments.
Deal volumes snowballed in energy and natural resources, e-commerce, retail and consumer, and education sectors. “The outlook for 2019 may be tepid for the first two quarters, but it should eventually pick up and end on a positive note, given the strong fundamentals and deal pipelines. However, a lot will depend on the continuing reforms, new policies and pace of reforms post general elections,” Mehra added. The continuing push by the government and reforms like RERA, housing for all, bank recapitalisation, Pradhan Mantri Jan-Dhan Yojana, BharatNet and Ayushman Bharat are expected to drive deal activity across sectors in 2019.