Deal activity in CY22 surpassed pre-pandemic levels to reach USD 159 billion across 2100+ transactions: PwC India Report

Sunday, 29 January 2023 – Despite global headwinds, deal activity in India surpassed pre-COVID levels to reach USD 159 billion with 2103 transactions, a 29% increase from CY21 in terms of value as per the PwC India report titled, “Deals in India: Annual review 2022.” India demonstrated signs of a stable deals market overall, defying the trend among most major economies of the world. 

Mergers and acquisitions (M&A) accounted for a major share of the deal value, boosted by more than 20 large transactions, and reached a record high of USD 107 billion – almost twice that of 2021. However, excluding the HDFC Ltd and HDFC Bank merger (worth USD 60 billion), M&A deal values were about 15% lower than that of 2021. Private equity (PE) investments stood at USD 52 billion, 22% lower than 2021 but 20% higher than all other preceding three years in terms of value and quantum.

It is to be noted that deal activity witnessed a steady decline quarter-on-quarter after a strong start in the initial months of 2022. 70% of deal activity in terms of value and volumes was witnessed in H1 2022, with only 30% activity in H2 2022.

Analysing deal activity in CY22, Dinesh Arora, Partner & Leader – Deals, PwC India, said, “The year 2022 has shown us that investor perspective on India is long-term, and the current market slowdown, while tough, will likely not result in major concerns for most. We believe M&A will be an essential instrument for companies to move forward, integrate supply chains, beat disruption and boost their market share.”

Annual review of deals in India – A snapshot

• M&A Activity: 72% of disclosed deal value was generated from domestic deals in 2022 (88%, if the HDFC merger deal is considered). Companies sought to consolidate positions, curb competition and enter new disruptive segments, leading to some of the largest-ever transactions in the banking, cement and aviation sectors. Sectors such as financial services, technology, healthcare, energy and power, and industrials are expected to stay active on the domestic front in terms of value creation and market share gain. 
• PE activity: Early-stage deals saw an uptick in deal value by 13% compared to 2021, reflecting investor confidence and the outlook for the Indian start-up sector, while buyouts and late-stage deals witnessed a 55% and 33% dip in deal value, respectively, compared to 2021. PE exits witnessed one of the slowest years in the last five years, with a 53% decrease in deal value and a 29% decrease in deal volume compared to 2021.

Globally as well, overall deal volumes in 2022 were below the record-breaking 65,000 deals in 2021. However they remained 9% above pre-pandemic levels. As per PwC’s Global M&A Industry Trends: 2023 Outlook, the current market conditions suggest that we are in a sweet spot for M&A, provided that companies have well-thought-out strategies and the financial wherewithal to make transformational deals to contribute to their longer-term success.