Reliance-Disney merger drives dealmaking in Q1

The Reliance-Disney mega merger, valued at $8.5 billion, led the resurgence in dealmaking by both volume and value in the January-to-March quarter, a roundup of deal activity by Grant Thornton Bharat showed.

The first quarter of the current calendar year saw 469 deals valued at $24.5 billion, the highest since the second quarter of calendar year 2022, the report said, while identifying robust private equity (PE) transactions, a rebound in initial public offerings (IPOs), and a series of high-value transactions as the driving factors.

These early indicators signal a promising trajectory for deal activity in the coming quarters, the report added.

“The surge in deal activity, driven by increased PE involvement and mega mergers, showcases the resilience of the market despite fluctuations. The mega merger between Reliance and Disney notably contributed to deal values. Excluding that, we observed a decline in overall values,” Shanthi Vijetha, partner for growth at Grant Thornton Bharat, said.

“However, the uptick in PE activity, highlighted by the emergence of two unicorns and high-value deals across traditional sectors, provides hope for continued growth and investment opportunities. With elections around the corner, coupled with a strong pipeline of deals and increased attention from private capital, the outlook for 2024 remains optimistic,” Vijetha added.

Deal volumes in the mergers and acquisitions (M&As) space during the quarter declined by 16% from 143 to 120, while the combined value of all M&A deals during the period rose by 38% to $12.3 billion.

While domestic M&A volumes declined year-on-year (y-o-y), cross-border activity surged to its second-highest quarterly level in five years.

“Outbound deals stood out, seeing a 9X increase in value compared to Q4 2023, largely attributed to the monumental Reliance-Disney merger,” the Grant Thornton Bharat report said.

Deal volumes in the PE space jumped 10% from the year-ago period to 307, while the combined value of all PE deals during the period jumped 51% y-o-y to $8.1 billion.

Following a period of exits via IPOs and block deals, the quarter “saw a robust pivot in strategy, with keen interest across sectors such as consumer goods, financial services, telecom, and infrastructure,” the report said.

Data Investment Trust’s $2.5 billion investment in ATC India Tower Corp. led dealmaking in the PE space. The quarter also two billion-dollar deals and eight high-value deals–PE transactions greater than $100 million–collectively contributing to about 70% of the overall deal value.

India also saw the birth of two new unicorns, Krutrim SI Designs and Perfios, during the quarter.

Sectors such as telecom and infrastructure, alongside retail and media, dominated deal values, while retail, information technology, and banking led in terms of volumes.

Meanwhile, the quarter saw 24 IPOs, the second-highest quarterly count in recent times, which collectively raised about $2 billion.

The share sales were spread across 11 sectors, with manufacturing and pharmaceuticals emerging as frontrunners, collectively cornering about one-third of the issues.

Companies also raised about $2 billion from 18 qualified institutional placements (QIPs) during the quarter.

Despite a slight decrease in both volumes and total amount raised compared to the previous quarter, Q1 2024 still ranked as the second-highest quarter in terms of deal volumes since 2018, the report added.