India reported a drop of 23 per cent in total deal volume while the total disclosed value dropped by 38 per cent since CY22, per the findings of PwC India report titled, “Deals at a glance”. However, despite a steady decline through the first three quarters, PwC report stated, deal activity stabilised towards the last quarter of the year, setting the stage for a promising 2024. Cumulatively, 1860 deals with a total disclosed deal value at $75 billion were completed in CY23.
In CY23, merger and acquisition (M&A) deals totaled 793, registering a drop of 10 per cent compared to CY22, while the total disclosed deal value for M&A fell by 38 per cent. Domestic deals fell by 18 per cent, to 494 in CY23 from 601 deals in CY22. However, there was an uptick of 14 per cent in the volume of inbound deals. On the disclosed deal value front, while four out of the top five M&A deals are domestic deals, outbound deals saw a significant rise of 31 per cent from last year.
Further, Private Equity (PE) investments dropped by 36 per cent as compared to the previous year, at $36 billion. Despite this decline, the report stated, the average investment size per deal increased to $46 million from $42 million last year, reflecting a potential shift towards larger opportunities. While early-stage investments were 53 per cent less compared to CY22, these along with growth-stage investments continued to make up the major share, constituting around 73 per cent of fundings in CY23. On the other hand, buyouts demonstrated resilience with only a 5 per cent decline compared to CY22, suggesting a nuanced landscape, where investors show interest in diverse strategies and larger-scale ventures, even amid an overall decrease in PE investments.
Dinesh Arora, Partner & Leader – Deals, PwC India, said, “In 2023, India resiliently navigated global headwinds, solidifying its appeal to international investors. The economic fundamentals stay strong reflecting investor enthusiasm for the country’s expanding economic opportunities and this optimism is also echoed in PwC’s latest CEO Survey. Despite a restrained deal-making environment throughout the year, deal activity stabilised towards the last quarter leading us to anticipate an upswing in 2024.”
In terms of sectors, retail and consumer sectors emerged as the most active sectors in CY23, with technology finishing up marginally behind for the second consecutive year. Besides these, the professional services and fintech sectors exhibited high activity in terms of volume. Meanwhile, financial services, renewable power, and healthcare dominated in deal value.
Top 10 deals of 2023, the PwC report maintained, included JV buyouts, strategic investments, PE buyouts, and stock mergers and contributed to 21 per cent of the total deal value. While PE deals were higher in volume overall, strategic deals dominated the top deals with domestic deals and group-level consolidations as a significant theme.
Furthermore, PwC’s 27th Annual Global CEO survey data indicated that 60 per cent of the surveyed CEOs plan to make at least one acquisition in the next three years. Also, 45 per cent of the CEOs expressed their doubt about their company’s viability beyond the next decade. “To tie back with our expectations, the survey also reveals that 56 per cent of these leaders see transactions as the best way to stay in touch with market developments and 70 per cent of them expect to leverage M&A for the accelerated adoption of technology and related processes,” the report stated.