India’s M&A activity holds strong in 2023, but dips from 2022 peak

India successfully maintained its long-term momentum in mergers and acquisitions in 2023, backed by midmarket acquirers and conglomerates, Bain & Company said in a report. 

India had witnessed a record 109 merger and acquisition deals worth $118 billion in 2022. 

In 2023, the number of deals came down to 89, with a total value of $21 billion. 

Though the number of deals in India dropped compared to 2022 in value and volumes, joint ventures continued to gain momentum, American management consultancy’s 6th report on global M&A noted. 

Bain and Company used first and third-quarter merger and acquisition data from Dealogic and S&P Capital IQ to estimate a deal count for 2023.

Midmarket acquirers and conglomerates actively pursuing Engine 2 opportunities, industry leaders branching out into newer areas, and large companies reshaping portfolios and strengthening balance sheets through divestitures and spin-offs mainly drove the M&A deals last year. 

Among Indian conglomerates that continued to push ahead with their acquisition strategy, Reliance Retail purchased Raskik, V Retail, and Ed-a-Mamma to build an omnichannel retail business. 

Aditya Birla Group’s TMRW recorded its ninth acquisition in 2023 with menswear brand The Indian Garage Co (TIGC). 

Sheela Foam’s acquisition of rival Kurlon, Ipca Laboratories making a bid for a controlling stake in pharmaceutical peer Unichem, and Torrent Pharmaceuticals acquiring Curatio in a $245 million deal were some of the top midmarket acquisitions in the country.

Out of 89 deals this year, almost 50% were by midmarket acquirers, according to the report.

Indian large companies following the divestiture route included SpiceJet, hiving off cargo and logistic business of SpiceXpress; Dalmia Cement, offloading its refractory business via a share-swap agreement to focus on cement production; and Raymond Consumer Care, selling its deodorants and sexual wellness categories to Godrej Consumer Products and de-merging its lifestyle business to create a separate listed entity.

The report said that 80% of participants who participated in this survey expect that the momentum will continue this year. 

M&A practitioners are not stymied by many of the headwinds that stall deals in other markets and are less concerned about the cost of capital, the survey concluded. 

The M&A Practitioners’ 2024 Outlook Survey was done with the Gerson Lehrman Group, AlphaSights, and IncQuery. A total of 306 M&A practitioners participated in the survey that ran in October 2023 in the US, Canada, Brazil, the UK, Germany, France, Japan, India, and Australia. 

Survey participants were senior executives, including vice presidents, senior vice president/executive vice president, directors, C-suite, and owners at companies with over $100 million in annual revenue that closed an M&A deal within the past three years.

The global survey findings highlighted emerging trends, with the Gulf’s Sovereign Wealth Fund reporting increasing exposure to Asia. During the first three quarters of 2023, those funds invested $8.5 billion in improving their ties to Asia, nearly a 60% rise over 2022. The activity was spread across Asia, including China, India, South Korea, Japan, and Singapore.

The report predicts that higher growth segments will attract deals, including technology shifts such as copper to fiber, 4G to 5G, and on-premise data storage to public cloud and data centers as demand for data continues to surge amid tech advances. 

Enterprise services deals in 2023 included Proximus, a Belgium-based provider of digital communications and identity services, buying a majority stake in India-based Route Mobile for more than $700 million, the report mentioned.