The financial services sector saw mergers and acquisitions worth $867 million in the second quarter of 2024 and $1.6 billion worth of private equity investments flowing in, according to Grant Thornton Bharat. Overall activity in the sector in Q2 saw a 23 per cent rise in volumes with 63 deals being transacted and a 46 per cent rise in the value of deals.
“Despite the uncertainty surrounding election results, the market has shown resilience and optimism, reflected in robust primary investments and healthy consolidation,” it said.
The top five M&A deals with a value of $816 million contributed to 94 per cent of the total in that segment while among PE investments, the top five contributed 65 per cent to the total.
M&As
There was a 15 per cent sequential rise in the volume of deals in mergers and acquisitions with 15 deals transacted. The value of the deals, however, went down by 11 per cent to $867 million.
The volume of the M&A deals was led by domestic consolidations with a 73 per cent share, indicating a preference for local strategic investments. The value of the deals was led by inbound transactions which contributed 84 per cent. This influx of substantial foreign investment emphasizes the sector’s appeal to international investors, the report said.
The top deal in the sector was Zurich Insurance Group increasing its stake in Kotak Mahindra General Insurance to 70 per cent. It is the largest foreign investment in India’s general insurance market and is the first of its kind by a foreign insurer since the FDI limit was raised to 74 per cent from 49 per cent in 2021.
PE Investments
PE deals rose 26 per cent per cent to 49 deals while the value increased 128 per cent.
This slight increase in volumes and a 2.2x increase in values was driven by high value deals in in the quarter. “This resurgence can be attributed to several big-ticket investments aimed at capitalising on emerging opportunities.”
Among the top deals was that of Warburg Pincus acquiring Shriram Housing Finance for $558 million.
The average deal size increased to $20.4 million from $9.2 million in the previous quarter. “This suggests a strategic shift towards fewer but more substantial investments.”