PwC India expects an increase in the number of small and medium-sized M&A transactions, ET EnergyWorld

New Delhi: PwC India expects a revival in Indian markets, especially in small and medium-sized M&A (M&A) deals and growth financing driven by rising investor confidence. 2023 witnessed the emergence of a diversified M&A landscape with investors showing interest in diversified strategies and larger-scale ventures, even with an overall decline in PE investments, said Sanjeev Krishan, president, PwC India. Although PE deal volume was higher, strategic deals dominated the top deals, with domestic deals involving group-level consolidations being the dominant theme. In the first quarter of 2024, the value and volume of transactions increased again.

According to the PwC report, the top 10 deals of 2023 included JV buyouts, strategic investments, PE buyouts and equity mergers, accounting for 21% of the total deal value. Although overall PE transaction volume was higher, the most important transactions were dominated by strategic transactions, with domestic transactions and group-level consolidations being important themes.

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“From a sector perspective, traditional sectors are leading, including retail and consumer, healthcare and pharmaceuticals. We expect a revival in Indian markets, especially in small and medium-sized M&A and growth financing deals, Krishan told PTI.

He was answering a question on the changing mergers and acquisitions landscape in India.

Optimism around mergers and acquisitions is based on three key factors – the improving situation in financial markets indicates an increase in investor and CEO confidence; dealmaking has reached a turning point due to pent-up demand from buyers and growth in seller assets; and accelerating global megatrends have created a need for companies to reinvent their business models, which can be accelerated through mergers and acquisitions.

According to Krishan, sectors such as e-commerce, healthcare and biotechnology, renewable energy, electric vehicles and electric vehicle infrastructure, infrastructure, banking, financial services and insurance, IT services and technology (including artificial intelligence and semiconductors) have exciting prospects.

“In the future, we can expect a shift towards growth financing and a possible revival in venture capital. We may also see an increase in the number of transactions involving controlling stakes and an increase in the number of portfolio exits in capital markets and IPOs,” he said.

He added that in line with the transformation trend, the same could also be seen in PE operating models – increased buyouts, platforms and empowerments, as well as a greater focus on sustainability and ESG integration.

Regarding PwC’s expansion plans in India, Krishan said each of its service lines – advisory, assurance and tax – has seen growth and recorded a CAGR (compounded annual growth rate) in the range of 20-25 per cent.

“We are also making changes in the way we operate to better align with and contribute meaningfully to India’s Viksit Bharat programme,” he said.

In terms of headcount, he said the current size is 27,000 across India, including around 700 partners.

Krishan further said that PwC India is focused on talent acquisition in key areas including transformation, emerging technologies, GCC, ESG, risk and transactions.

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