The value of business deals in India—both through mergers and acquisitions, and private equity—rose 29% in 2020 over the previous year to $77.7 billion, according to Grant Thornton’s annual dealtracker. By volume, India saw the number of deals rise 3% to 1,301.
And yet, nearly a third of that value came from the investments made by a clutch of high-profile investors in Reliance Industries Ltd.’s Jio Platforms and its retail venture. Ambani’s ambition to model an internet and retail giant on the likes of Tencent and Amazon has attracted funding from the likes of Facebook, Google, KKR and Silver Lake, among others.
Without the fundraising for Reliance, India would’ve seen a 16% decline in total deal value.
Even before Covid-19 came knocking, dealmaking activity in India was subdued due to multiple issues like global trade tensions, corporate debt distress, and an ongoing economic slowdown, Grant Thornton said. In 2019, deal transactions had fallen to $61 billion from a record-high of over $100 billion in 2018.
The impact of Covid-19 on merger and acquisition activity in 2020 was a mixed bag, Grant Thornton said. India saw over 350 M&A deals worth $37.5 billion during the year—it’s lowest yearly volume since 2011. “Domestic buyers and sellers continued to dominate the M&A dealmaking space, accounting for more than half of the year’s deal volume.”
Cross-border deals were the biggest casualty of the pandemic. There were only 65 inbound deals, where a foreign entity completes an M&A in India, worth over $18 billion. Overseas acquisitions saw more than 75 transactions of about $3 billion in value.
Private equity dealmaking, however, emerged unscathed. “2020 saw record PE dealmaking activity in India with investments worth $40.2 billion, 28% higher than the previous record witnessed in 2019, with around 950 deals,” Grant Thornton said.
Higher deal activity was mainly due to increased investor appetite in the second half of the year after the economy started opening up and companies were reevaluating their business choices to suit the post-pandemic world.
The top deals, Grant Thornton noted, came across telecom, consumer goods, oil and refining, ports, finance, industrials, real estate and technology sectors. Sectors where dealmaking took a hit due to Covid-19 included aviation, hospitality, travel and tourism.
Grant Thornton expects deal momentum to increase in 2021 with policymakers looking to attract more foreign investment and orchestrating an economic resurgence.
“2021 will perhaps witness a healthy balance between infrastructure that being both brick-and-mortar as well as technology and at the same time having a consumer focus, which is around technology or allied technology,” it said.