The mergers and acquisitions (M&A) and private equity (PE) markets in the technology space witnessed a significant rebound in the third quarter of 2024, driven by a surge in strategic investments and renewed investor confidence.
The July-September quarter saw 83 deals valued at $761 million, marking the highest deal volume since the second quarter of 2023, according to a report by Grant Thornton Bharat. The deal activity grew by 5 per cent in volume and 31 per cent in value from the previous quarter, registering 79 M&A and PE deals worth $635 million.
While overall deal values were the lowest for the year, the report highlighted a shift towards more strategic investments rather than large-scale acquisitions.
“The recent interest rate cut by the US Fed, coupled with India’s post-election stability, has infused new momentum into the deal landscape,” Raja Lahiri, Partner at Grant Thornton Bharat, said.
“We’re witnessing a dynamic market with increased M&A activity, robust PE investment, and a strong pipeline of IPOs,” he said.
PE drives growth
Private equity investments played a dominant role in driving deal values, accounting for 82 p.c. of the total. Three high-value deals exceeding $100 million contributed significantly to the PE landscape, injecting $ 358 million into the market.
While overall deal values were down compared to last year’s period, primarily due to the absence of big-ticket M&A transactions, the PE sector demonstrated resilience and growth potential.
The PE space recorded 53 deals worth $519 million, down by 7 per cent in volume but up by 17 per cent in value compared to the previous quarter.
“The average deal size increased from $ 7.8 million to $ 9.8 million, driven by three high-value deals (over $100 million) compared to one in the previous quarter,” the report said.
Small-ticket transactions (less than $5 million) dominated, accounting for 74 per cent of deal activity, showing a preference for smaller, strategic investments.
The M&A market also showed signs of recovery, with deal volumes reaching their highest point since the second quarter of 2023. Domestic M&A activity was particularly robust, reaching its highest quarterly level since the first quarter of 2022. Outbound deals also significantly increased, accounting for 62 per cent of total M&A deal values.
The technology sector emerged as a key investment magnet, particularly tech startups and Software-as-a-Service (SaaS) companies. Tech startups captured 64 per cent of deal volumes and 40 per cent of deal values in the PE space, while SaaS companies accounted for 60 per cent of deal values, driven by two major strategic acquisitions.
Outlook
The report suggests a positive outlook for India’s deal landscape in the coming months, with a robust pipeline of investments expected. Investor confidence remains high, fueled by attractive valuations, growth prospects, and promising exit opportunities.
“As investors continue to prioritise quality, we expect sustained deal activity and strategic investments,” Lahiri added.
“With ample capital available, India is poised to remain a preferred destination for global investors,” he said.