According to data compiled by Bloomberg, India saw $ 82.3 billion pending and completed M&A deals in the second quarter, the highest amount on record. That’s more than double the previous record of $ 38.1 billion in the third quarter of 2019. Globally, M&A volume reached $ 827.6 billion in the quarter, down 8.7% from the same period in 2021.
The boom in India is dominated by HDFC Bank Ltd, a 60 60 billion all-stock acquisition of Housing Development Finance Corp. in April, which includes India’s most valuable bank and the largest mortgage lender in the country’s largest ever M&A transaction. The move shows how major Indian companies facing disruptive trends such as the rise of fintech and climate change are turning to dealmaking as a tactic to reshape themselves dramatically.
According to Sonjoy Chatterjee, chairman and chief executive officer of Goldman Sachs Group Inc., “As groups unite to become stronger and gain market share in their core areas, there will be two major themes: new or innovative initiatives around ESG and digital.” In India. The second is especially the focus for all companies, regardless of the sector, he added.
“There will be no further strategy that does not provide a clear path to deliver this,” Chatterjee said.
The combination of two software companies controlled by Mindtree Ltd. and Larsen & Toubro Infotech, an engineering conglomerate led by Larsen & Toubro Ltd., showed how India’s largest companies are changing their position in a 3.3 billion all-stock deal announced in May. Landscape in technology, aided by volatility in markets.
Even without HDFC Megadill, India’s second quarter will still rank as its fifth-best quarter on record, thanks to transactions such as the $ 10.5 billion deal to buy billionaire Gautam Adani’s Ambuja Cement Ltd, which has given his group a significant presence in the industry.
Ganesan Murugan, head of corporate coverage and advisory at BNP Paribas SA in India, said, “Market correction has definitely increased the appetite of strategic investors with resetting valuations in India.”
Companies moving towards renewable energy in India were one of the largest dealmakers. Shell plc agreed to buy renewable power supplier Spring Energy Pvt. For $ 1.5 billion in April, while French oil giant TotalEnergy SE bought a 25% stake in Adani New Industries Ltd. earlier this month. The firm plans to invest more than $ 50 billion in technologies such as green hydrogen over the next decade.
Putting together large acquisitions would be challenging, Murugan said. “Getting long-term credit is not easy and the high-yield leverage buyout market – corporate loans – has literally closed.”
Like Chatterjee, Murugan’s green and digital transitions lead to more transactions. His team has grown from nine bankers in 2021 to 12 this year, and he is considering adding another three.
The next wave of deals could come in the mid-market, where a bunch of older founders are starting to hand over the reins to their offspring.
“On a regular basis, we feel that the next generation is interested in other themes, especially in tech platforms and ESG,” Chatterjee said. “Themes coming out of the epidemic have improved perspectives and preferences around what the next generation wants to do with their future – very personally.”