India’s M&A activity in 2023 highest in almost a decade: Bain & Co.

The consultancy firm said a similar number of deals, or more, are likely this year

Priyamvada C
First Published30 Jan 2024
In 2023, mid-market acquirers with up to $1 billion in revenue accounted for nearly half of the mergers and acquisitions.
In 2023, mid-market acquirers with up to $1 billion in revenue accounted for nearly half of the mergers and acquisitions.

Mergers and acquisitions in India last year surpassed volumes seen in most of the past decade, barring 2022, even as global M&A activity slowed, consultancy firm Bain & Co. said in a report. This year, the industry is likely to chalk up a similar run of deals, it added.

Indian companies struck more than 90 M&A deals worth a total of about $32 billion in 2023 (taking into account only deals that were worth over $75 million). In 2022, companies had struck 109 deals worth $118 billion. 

“The sustained momentum is driven by availability of attractive opportunities and assets, and heightened activity and disruption in sectors with structural tailwinds and favourable policies,” Bain & Co.’s India chairman Karan Singh said in a report published on Tuesday.

“Renewable energy, infrastructure, logistics, and manufacturing accounted for one in every three deals over the past 18 months,” he added.

For 2024, more than 80% of the respondents to Bain & Co.’s annual M&A Practitioners’ Outlook Survey expect to close a similar number of deals, or more.

“Market sentiment is bullish, with most dealmakers expecting a continuation or an improvement during 2024 across sectors,” Vikram Chandrashekhar, partner at Bain & Co., said in the report. 

“For example, in healthcare, deal volumes have grown consistently over the past five years and the momentum is expected to continue in 2024 with quality assets coming to market and a positive sector outlook,” he said. “As more assets become available and competition heats up in India, disciplined diligence can provide the edge to win the deal and set up for value creation.”

In 2023, mid-market acquirers with up to $1 billion in revenue accounted for nearly half of the mergers and acquisitions, mainly to bolster their market positions, Bain & Co. said.

Indian conglomerates also pursued acquisitions to reshape their portfolio and create new lines of growth. For instance, Reliance Retail Ltd’s acquisitions of beverage brand Raskik and footwear and apparel retailer V Retail Pvt. Ltd last year, as well as a 51% stake purchase in actor Alia Bhatt’s kidswear brand Ed-a-Mamma.

Also, Aditya Birla Group’s agrisciences company PI Industries Ltd ventured into the pharmaceuticals space with two global acquisitions—Therachem Research Medilab’s assets in the US and its subsidiaries in India, and Italy’s Archimica SpA.

Globally, meanwhile, M&A activity dropped 15% to $3.2 trillion in 2023, the lowest in a decade, as dealmakers grappled with high interest rates, regulatory scrutiny, and mixed macroeconomic signals that made them more cautious.

This year, however, companies have their eyes on assets that didn’t come to market in 2023. 

“A need for liquidity will motivate some sellers, while others will divest assets while reshaping their portfolios,” Bain & Co.’s global partner Les Baird said. “As interest rates stabilise, we expect the logjam in M&A markets will break. When it does, competition for assets will be significant.”

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