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Deal activity reaches USD 114.9 billion in CY 2021: PwC India Report

10 February, 2022

PE deal value reached an all-time high  in CY21 with USD 66.1 billion across 1258 deals – 32% higher in volume and 50% higher in value compared to CY20.

Thursday, February 10, 2022 – Despite the headwinds from the pandemic and other looming uncertainties, deal activity in India witnessed a record high in 2021 and surpassed pre-COVID levels. Deal activity in CY21 reached USD 114.9 billion with 2064 transactions, a 40% increase from CY20 in terms of value and 60% in terms of deal volume as per the PwC India report titled, “Deals in India: Annual review and outlook for 2022.

A key contributor to the buoyancy of deal activity in 2021 is abundant cash reserves, availability of private equity dry powder, foreign direct investment and lower interest rates. PE claimed the lion’s share of deal activity in 2021, contributing 57% by value and 61% by volume, while M&A contributed the remaining 43% by value and 39% by volume. PE deal value reached an all-time high  in CY21 with USD 66.1 billion across 1258 deals – 32% higher in volume and 50% higher in value compared to CY20.

Analysing deal activity in CY21, Dinesh Arora, Partner & Leader – Deals, PwC India, said, “It is clear that despite headwinds from the pandemic and other uncertainties, CEOs in India are significantly optimistic about the prospects for a stronger economy in the coming year. We therefore expect the momentum of deal activity to continue in 2022. On the corporate side, we expect the strategic shift to digital, innovative and new disruptive business models to continue to drive M&A decision-making.”

Annual review of deals in India – A snapshot

  • M&A Activity: Deal volumes were bumped up by M&A activity in 2021, more than double the volume and 28% higher in value compared to 2020. M&A megadeals in sectors such as renewables, infrastructure and education reflect the continued interest in consolidation. Economic optimism and availability of abundant capital spurred domestic M&A in 2021, with companies liquidating non-core assets to streamline large corporate structures and in turn using the cash to buy assets.
  • Tech sector investments: The technology sector continues to dominate the Indian PE investment landscape. 2021 recorded a total of 823 deals totalling USD 40.0 billion, approximately five times the deal value witnessed in 2020. This sharp increase is primarily owing to large deal size, i.e. five billion-dollar deals totalling USD 12.1 billion and 78 mid-sized deals (investments in the range of USD 100–1,000 million) totalling USD 19.4 billion, compared to just 19 mid-sized deals in 2020.
  • PE exits: PE exits increased exponentially in 2021, recording over six times the exit value of 2020, indicating that long-term investors seeking high valuation are taking advantage of the momentum. Strategic sales saw the highest activity, accounting for 36% of the exit value in 2021.
  • New unicorns: A record number of 43 Indian startups turned into unicorns in CY21. Indian start-ups had a blockbuster CY21 with approximately USD 35 billion raised, a three times increase compared to CY20 and largely driven by FinTech, EdTech and SaaS. Around USD 35 billion was raised by Indian start-ups across more than 1,000 rounds in CY21.

Globally, mergers and acquisitions (M&A) hit new highs in 2021—breaking prior records by a long shot. The number of announced deals exceeded 62,000 globally in 2021, up an unprecedented 24% from 2020. As per PwC’s Global M&A Industry Trends: 2022 Outlook, publicly disclosed deal values reached all-time highs of USD5.1 trillion—including 130 megadeals with a deal value greater than USD 5 billion—a whopping 57% higher than in 2020 and smashing the previous record of USD 4.2 trillion set in 2007. The often-frenzied M&A activity in 2021 was fuelled by intense demand for technology, and for digital and data-driven assets, and the pent-up deal-making demand from 2020 that was unleashed.

ENDS

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