The mergers and acquisitions landscape in India: Overview and recent trends

India, dazzling globally in economic growth, is projected to expand at a robust 6% to 7% annually, surpassing the global average of up to 2% in developed markets, which currently face several headwinds in the form of global geopolitical volatility, unfavourable macro-economic conditions, soaring gold prices, and financial challenges. 

India’s M&A activity shows record deals for the year 2022 and continued long-term momentum in 2023. Historically, M&A activities slow down during times of economic uncertainty, but often these are the times when valuations and new opportunities become more attractive. The past two years set up ideal conditions for deal making in India amidst solid corporate balance sheets; unutilised money available at fund houses; liquidity; increased purchasing power; favourable policies toward renewable energy; and strong infrastructure, logistics and manufacturing. India has become a hot spot outside the United States, luring conglomerates to gain large profits through M&A. 

Though mergers need to pass through the test of India’s tribunal and regulatory authorities for all companies and exchanges, the central bank, the Competition Commission of India (CCI), and sector-specific boards for listed and large companies, acquisitions are primarily based on few approvals and legal agreements. The year 2023 ended with the CCI approving over 90 transactions (of which 25+ were under the “green channel” route, based on self-declaration of all compliances by corporations). High-quality due diligence is always a critical factor that contributes to deals outperforming expectation, thereby assisting in fair-deal valuation and increased negotiation power.

The deal landscape of India demonstrates the value it has provided to various industries and is reflected through soaring Indian stock market indices. The eye-widening growth through M & A deals in India and in sectors like healthcare; energy; engineering; banking, financial services and insurance (BFSI); IT; and manufacturing manifests the growth and success of India’s business landscape, where firms like Flipkart, Walmart, Proximus and many other multinationals are collaborating to reap economic gains. 

Given India’s strong economic fundamentals and budget reforms, coupled with current government’s vision of Viksit Bharat @2047 (a vision to make India a developed nation by 2047, the 100th year of its independence), M&A activity in 2024 is expected to remain robust – backed by continued domestic demand, increased competition, and stronger corporate balance sheets. Top Indian companies are in talks for acquisitions in this year, especially in the renewable energy, electric vehicle, and battery storage segments, as environmental, social, and corporate governance, and technology themes are expected to dominate corporate board rooms in 2024. 

#- Source – Venture Intelligence

---

Jagruti Sheth draws on over 27 years of experience in corporate restructuring, M & A, capital structuring, valuations, due diligence, private equity deals, IPO, corporate law and exchange control regulations, and sick company restructuring. Jagruti is a partner at RNM India.