The value of mergers and acquisitions (M&A) in India dropped in 2023 compared to the previous year according to a recent report. M&A refers to when two companies decide to join together through a merger or when one company takes over another through an acquisition.
The total value of M&A deals that took place in India fell by 27% in 2023 compared to 2022 according to the report by consultancy firm Deloitte. The value of deals in 2022 was Rs. 13.6 lakh crores but came down to Rs. 9.86 lakh crores in 2023. Even though the global economy faced many challenges like high interest rates and uncertainty due to the war in Ukraine, India’s M&A market remained stable compared to other countries.
Some key sectors that saw major M&A activity in India were financial services, technology, media and telecom. However, the total value of deals in the financial services sector declined by 45% from 2022 levels. The technology, media and telecom sector also saw a 33% drop in deal value. Overall, the value of cross-border deals, which are deals between companies located in different countries, declined by 11% compared to 2022.
On the other hand, inbound deals that involve foreign companies acquiring Indian businesses saw significant growth. Their share of total deal value increased from 27% in 2022 to 41% in 2023. This shows that international investors continue to see opportunities in India despite global challenges. Outbound deals, which are Indian companies acquiring foreign businesses, saw deal value decline sharply by 49% in 2023.
Two sectors that performed better than others were energy and manufacturing. The energy sector, especially renewable energy projects, witnessed a huge jump of 63% in deal value. This shows growing interest from foreign investors in India’s clean energy sector. The manufacturing sector also saw deal value increase by 33% and volume by 22%, driven mainly by the automotive industry and auto components.
Going forward, the report expects India’s M&A market to remain stable in 2024 even as global economic challenges persist. Manufacturing is likely to be a major driver of deals, especially in electric vehicles and auto components. The government’s initiatives in renewable energy will also attract more M&A activity in that sector. Large-scale consolidation deals are anticipated in the financial services industry amid regulatory changes. Private equity investments may remain consistent while deal activity could pick up pace after 2024.
So in summary, while India’s M&A market slowed down in 2023 due to global headwinds, key sectors like energy and manufacturing performed strongly. With a stable domestic economy and continuing reforms, M&A activity is projected to hold steady in 2024 from current levels. This shows that businesses and investors continue having confidence in India’s growth story.
