India sees record-breaking M&A activity with $126.09 billion in deals

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Merger and acquisition (M&A) activity in India reached a record $126.09 billion across 1,185 deals in 2022, according to Bloomberg data. This represents a 141% growth rate, largely due to the $57 billion merger between HDFC Bank and Housing Development Finance Corporation, the largest deal in India’s corporate history. This deal alone was worth more than the total value of all deals in 2021, which was $52.31 billion.

Adani Group’s acquisition of Holcim Group’s stake in Ambuja Cements and ACC for $10.5 billion was the second largest deal of the year and the largest M&A transaction in India’s infrastructure and materials sector. The merger of two Larsen & Toubro subsidiaries – L&T Infotech and Mindtree – with a deal value of $3.3 billion came in third. Other notable deals included steel maker ArcelorMittal’s arm AM/NS India acquisition of two port assets and a power plant from the Essar Group for a net value of about $2.4 billion, and private lender Axis Bank’s acquisition of Citibank’s India consumer business for $1.6 billion in an all-cash deal.

Overall, M&A deals in India rose 2.41 times from $52.31 billion in 2021, and were up 26.7% from the 935 deals recorded in the previous year. In terms of sectors, technology and financial services constituted the major deal value, taking up over 30% of the total deal value. Domestic deals accounted for a significant share of the deals, with 72% of the value and 52% of the volume coming from domestic sources.

When considering acquisitions alone, the deal size fell to $2.8 billion in 2022, compared with $3.8 billion in 2021, according to data from Tracxn Technologies. There were 634 deals in 2022, compared with 541 in the previous year. In the second quarter of 2022, India recorded over $82 billion in pending and completed M&A deals, the highest amount on record and more than twice the previous record of $38.1 billion in the third quarter of 2019, according to Bloomberg data.

Sector analysts expect the momentum of M&A activity to continue in 2023, driven by attractive valuations and stronger balance sheets. However, the potential impact of the next wave of the Covid-19 pandemic will also need to be monitored. According to a Morgan Stanley report, India is set to become the world’s third-largest economy by 2027, surpassing Japan and Germany, due to key investments in technology and energy.