India’s mergers & acquisitions market showing strong rebound

16 August 2021 3 min. read
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India’s mergers & acquisitions market showed a strong rebound in the second quarter of 2021, lifting year-to-date deal value to over $47 billion. This is according to a new M&A study by management consultancy Nexdigm. 

Amidst the hardships of the second wave of Covid-19 and looming concerns around a third wave, deal-making in the first half of 2021 has shown resilience with $47.35 billion from 1,207 deals. Notably, the first half of 2021 witnessed a growth in value terms of 13% vis-à-vis the same period the year previous.

Domestic deals dominated the landscape at $13.9 billion (222 deals), of which the top seven deals contributed over 70% with the financials (the acquisition of Dewan Housing Finance Corporation), consumer discretionary (the acquisition of Supermarket Grocery Supplies), and healthcare sectors in the lead. 

Deal value

Continuing its upwards trajectory, the healthcare sector has now been seeing uninterrupted growth at 22% (CAGR) since 2016. Propelled by the repercussions of the pandemic, the pharmaceuticals segment was the most active segment, followed by healthcare providers and healthcare services. The healthcare technology segment witnessed the largest deal – DocOn’s acquisition of Thyrocare. 

Outbound deals stood second at $5.2 billion (30 deals) with the top two deals comprising around 95% of the value: the acquisition of SB Energy by Adani Green Energy for $3.5 billion, and Wipro’s $1.5 billion purchase of financial services consulting firm Capco. 

While in the first quarter of 2021 the majority of deal value was contributed by M&A (52%), the weightage shifted to equity investments in the second quarter (46%). A total of 781 equity investments were witnessed in H1 2021 vis-à-vis 569 deals in H1 2020 and 669 deals in H2 2020. 

Deal volume

Private equity

Despite anticipated challenges, private equity and venture capital firms maintained their enthusiasm in Indian markets owing to “confidence in the recovery and long-term potential of the Indian market, lucrative opportunities in the startup space, and promising entrepreneurial talent,” said Tanwir Shirolkar, a Director in the Transaction Advisory Services practice of Nexdigm. 

“Investors continued to allocate capital and tap into deal opportunities in the recovering landscape as the Indian economy demonstrated adaptability and agility. Ongoing vaccination drives, recovery of several Covid-19 affected sectors, upscaling technology, and digitisation of work areas reinforced anticipations of a strong recovery.”

Value mix

Commenting on the outlook for the second half of the year, Shirolkar said: “Major trends of the first half of 2021 such as strategic consolidations in the domestic market, global outlook of Indian players and digitisation driven deals are expected to continue in the near future.” 

Meanwhile, a number of government policies are expected to provide a positive impulse on the market. “Government initiatives for boosting the manufacturing segment in the form of Production Linked Incentive (PLI) schemes and relaxations in tax norms are aimed at upholding investor confidence through challenging times.” 

According to a recent analysis from Bain & Company, India is Asia Pacific's second largest deal market.