Mergers & acquisitions (M&A) activity involving India witnessed a strong start in January-March 2022 at $30.3 billion, which is at a four-year high, said a new report by Refinitiv, a LSEG business.
This was a 5.6 per cent increase over M&A activity recorded in the same period last year and the highest first quarter period since 2018 ($31.1 billion).
Number of announced deals grew 29.6 per cent year-on-year and saw the busiest-ever period, the Refinitiv report showed.
Inbound activity
India inbound M&A activity grew 17.9 per cent to touch $ 11.6 billion in the first quarter of this calendar year from a year ago. This was the highest first quarter (Jan-Mar) period inbound M&A activity since 2017.
Outbound M&A from India, too, saw a strong show at $5 billion, more than double in value compared to a year ago, making it the highest first quarter period since 2010.
Domestic M&A activity in January -March 2022 amounted to $12.1 billion, down 24.5 per cent in value compared to the same period last year. The US was the most active foreign acquirer in India with $8.2 billion worth of deals, up 39.0 per cent from a year ago and accounted for 70.1 per cent market share of India’s inbound M&A.
Elaine Tan, Senior Analyst at Refinitiv, said:”While global deal making fell to its lowest opening period since 2020, the start of the Covid-19 pandemic, M&A activity involving India witnessed a strong start as first quarter period reached a four-year high. The acquisition of technology and healthcare, availability of private equity and abundant cash reserves as well as historically low interest rates, were key factors pushing M&A growth so far this year”.
Majority of the deal making activity involving India targeted the high technology sector by value and number of deals totalled $6.6 billion, double the amount from a year ago and captured 21.8 per cent market share. Healthcare captured 15.5 per cent market share and grew four-times in value to $4.7 billion compared to the same period last year. Financials accounted for 13.5 per cent with $4.1 billion, down 41.3 per cent year-on-year.
Private equity deals targeting Indian companies also kicked off at a record pace and amounted to $ 9.8 billion, with high technology sectors capturing the majority of the activity with 28.7 per cent market share.
“With India’s strong innovative start-up economy, deal making in the technology and technology-adjacent sectors, could continue to drive activity, despite current challenges brought by market volatility fueled by geopolitical tensions”, Tan said..
Equity capital markets
While M&A deal activity was strong, the Indian equity capital markets (ECM) in the first quarter this calendar year recorded 64.3 per cent decline at $ 3.1 billion — the lowest start to a year since 2019. The decline could be attributed to the 23.3 per cent decline in the number of ECM offerings for the period under review.
Follow-on offerings, which accounted for 67 per cent of India’s overall ECM proceeds, raised $ 2.1 billion, down 64.9 per cent from a year ago, while number of follow-on offerings fell 25.8 per cent year-on-year.
Initial public offerings (IPO) from Indian issuers saw a slow start and raised $ 1.0 billion during the first quarter of this year, a 57.1 per cent decline in proceeds after witnessing a strong first quarter period last year.
This is the lowest first quarter period for Indian IPOs since 2019. Number of IPOs also fell 14.8 per cent year-on-year. Adani Wilmar priced India’s largest IPO so far this year, raising $484.5 million in January.
ECM Issuance from healthcare sector accounted for majority of the nation’s ECM activity with 25.3 per cent market share worth $781.6 million in proceeds, a 96.4 per cent increase year-on-year in proceeds.
Retail saw a 185.7 per cent increase in proceeds and captured 19.7 per cent market share, while consumer staples and high technology followed with 16.2 per cent and 10.9 per cent market share, respectively. Kotak Mahindra Bank currently leads the ranking for India’s ECM underwriting with $654.1 million in related proceeds and 21.2 per cent market share.