India has witnessed a record growth of 139% in overall M&A deal size, driven by record levels of cash and availability of assets, according to the latest Bain & Company’s annual Global Mergers & Acquisitions Report. India has witnessed M&A deals worth $138 billion in 2022.
Strong corporate balance sheets and ample private equity (PE) dry powder to deploy have contributed to the robust environment for M&A.
“We have seen four straight years of growing deal volume and value, with 2022 setting another record year. We are seeing strong M&A activity across sectors, including financial services, utilities, manufacturing, and healthcare,” said Karan Singh, managing partner, Bain & Company India and author of the report. Environmental, social, and governance (ESG) is a new theme and India is emerging as a hotspot for renewables, he added.
In India’s biggest merger announcement ever, HDFC, the mortgage firm, signed on to merge with HDFC Bank in a deal valued at $40 billion.
India’s conglomerates are making bets on new growth engines and future profit pools that offer higher multiples than their traditional businesses through scope deals. Adani’s $10.5 billion deal for Ambuja Cements and ACC makes it the second-largest cement manufacturer in India, the report said.
Torrent Pharma bought skin care player Curatio Healthcare to strengthen that part of its portfolio. Also, many companies are buying online businesses and combining them with their offline presence to create omni channel offerings for consumers. Aditya Birla Fashion and Retail bought controlling stakes across multiple brands as part of its effort to create a new digital-first house of brands.
“Balance sheets are strong, there is confidence to take bold bets on newer sources of growth, and high-quality assets are available as sellers are willing to exit at current multiples. M&A activity is strong across the board, from conglomerates acquiring new value creation engines, to insurgents buying into new segments and acquiring new capabilities,” said Vikram Chandrashekhar, partner Bain & Company.
The Indian government’s ambitious energy transition policies are opening up business opportunities. Renewable energy deals have seen significant accelerations as conglomerates, as well as traditional energy companies, are building their renewable presence in India, it added.
Additionally, India is becoming a prime alternative for global companies that are eager to diversify their supply chains. The shift is fueling deals in areas such as active pharmaceutical ingredients, specialty chemicals, and contract manufacturing, where private equity players are acquiring serial assets and rolling them up to create one large platform, the report said.
