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India M&A Hits New Highs: Here Are the Top Deals of Q2 2024 | Personal Finance

Posted on by darion

Adani Group acquisitions in the industrial materials and ports and terminals segments drove M&A activity, with four deals valued at $3.2 billion.

mergers and acquisitions
Illustration: Binay Sinha

Sunainaa Chadha NEW DELHI

Deal activity in India reached unprecedented levels in Q2 2024, according to Grant Thornton Bharat Dealtracker.

Q2 2024 saw a record 501 deals valued at $21.4 billion, the highest quarterly volume since Q2 2022. Combined, M&A and PE deals totaled 467, valued at $14.9 billion, up 9% in volume but down 28% in value from the previous quarter, largely due to the absence of mega-mergers like the Reliance-Disney deal in Q1 2024.

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The quarter saw a significant increase in the number of large-value deals (over $100 million), with 30 deals recorded compared to just 19 (including $3 billion deals) in Q1 2024, representing a 58% increase.

“Indian corporates are increasingly investing domestically, reflecting strong confidence in the local investment climate. Despite a decline in cross-border deals due to geopolitical instability, traditional sectors saw volumes grow compared to the previous quarter. Given the recent election results and the expected policy clarity from the upcoming Budget, political stability is expected to boost investor confidence and drive deal activity over the next six months,” Grant Thornton said in the report.

Traditional sectors such as pharmaceuticals and manufacturing saw increased deal activity in Q2 2024, collectively accounting for almost half of the total deal value.

Mergers and Acquisitions Landscape:

Domestic transactions drive growth: M&A activity saw 132 deals worth $6.2 billion in Q2 2024. This indicates a modest increase in volumes but a significant 50% decline in value compared to Q1 2024. Domestic deals were the main driver, with a 29% increase in volumes and a 2.5x increase in value compared to the previous quarter. Four high-value deals by Adani Group in the industrial materials and ports sectors contributed significantly to this increase, accounting for 52% of the total M&A value in Q2 2024.

Decrease in cross-border transactions:Conversely, the number of cross-border M&A deals declined, with volume down 24% and value down 85% compared to Q1 2024.

Transaction of the quarter:Ambuja Cement acquires 100% stake in Penna Cements valued at USD 1.3 billion. This transaction will increase Adani Cement’s market share by 2% in all of India and 8% in South India.

Where does the money go? Niche deal flows were recorded in specific sectors, notably in the electric vehicles, industrial materials, pharmaceuticals and biotechnology, energy and renewables, infrastructure and defence segments.

EP Landscape:

PE deal value and volume surged: PE investments saw a significant increase in Q2 2024, with 335 deals valued at $8.7 billion. This represents a 9% increase in volume and a 55% increase in value from Q1 2024. The quarter marked the highest volume since Q2 2022 and the second highest value with 21 high-value deals (≥ $100 million), representing 68% of total PE value.

PE deals dominated the entire transaction landscape, accounting for 72% of the total number of deals and 59% of the total value.

Although deals were dominated by small deals (below $7 million) at 53%, their share in the total value was only 4%, which highlights the concentration of value in larger deals in the PE sector this quarter.

Attention investors:

The increase in the value of the transaction (over $100 million) indicates a change in investor strategy. Investors want to strengthen their positions in companies with proven business models. These models are likely to be successful and generate revenues, satisfying existing consumer demand.

Investment examples:

  • Zepto ($665 million)
  • Lenskart ($200 million)
  • Apollo Health and Meesho ($275 million each):

QIP and IPO Landscape:

  • In Q2 2024, there were 20 Qualifying Institutional Placements (QIPs) with a total value of USD 2.3 billion, an increase in both value and volume compared to the previous quarter. This volume is the second highest since Q4 2017.
  • There were 14 IPOs with a combined value of $4.2 billion, the highest quarterly IPO value since Q2 2022, despite a 42% drop in IPOs from the previous quarter. This indicates a trend towards fewer but larger IPOs.
  • The retail and consumer goods sector topped the list in terms of overall number of transactions, but saw a marginal 7% decline in volume and 18% increase in value compared to the previous quarter.
  • The textiles, clothing and accessories segment was the sector leader, accounting for 28% of transactions worth USD 370 million
  • The e-commerce segment was the most valuable in terms of value, with 20 transactions recorded, representing 69% of the sector value and $1.4 billion.
  • Next, the retail, IT & ITes sector contributed 16% of the total deals in the quarter, with a marginal 9% increase in volumes, while values ​​declined compared to the previous quarter, resulting in a decline in the average deal value from $10.9 million in Q1 2024 to $9.7 million this quarter. Technology startups led the sector in both volumes and value, with 47% and 36% contributions, respectively.
  • The pharmaceutical, healthcare and biotech segment led the quarter in value with $3.8 billion in 53 deals, driven by ten high-value deals that contributed almost 86% of the sector value. The medical technology segment led in volume, while the medical device space led in value with 28%.
  • Pharmaceuticals, Manufacturing then led the quarter in terms of value, posting a 28% increase in volumes, while values ​​increased 9x over the previous quarter to $3.5 billion. This was mainly driven by three high-value deals (over $500 million) by the Adani Group in the Industrial Materials segment, accounting for 87% of the sector value. Industrial Materials also led in terms of volumes, accounting for 41% of the deals.
  • Professional and business services and aviation gained some ground this quarter, while recording weak activity in Q1 2024. Agriculture, transportation and logistics, real estate, among other key sectors, recorded significant increases in transaction activity. In contrast, facilities management, education, hospitality and leisure, and media and entertainment sectors recorded significant declines in overall numbers in Q2 2024 compared to the previous quarter.