India Inc faces steep decline in deal volumes, values amid economic challenges

New Delhi: Not just startups but India Inc overall saw only 676 deals, amounting to $23 billion in the first half of this year (January-June period), a substantial 78 per cent decline (year-on-year), a new report showed on Monday.

The mergers and acquisition (M&A) space bore the brunt of the decline, witnessing a 47 per cent decrease in volumes and a substantial 92 per cent decline in values, according to the Grant Thornton Bharat Dealtracker Report.

During the first half of 2023, both domestic and inbound deal activity experienced the second lowest levels of deal volumes since 2011 for the six-month period.

Outbound activity, on the other hand, reached its lowest volume with only 21 deals, due to absence of any billion-dollar deals.

“The first half witnessed a decline in deal activity in India, primarily due to uncertainties causing supply chain disruptions, leading to inflation, and fluctuating interest rates. However, with the given macroeconomic conditions, reduced market volatility, and stable interest rates, there is an optimistic outlook for increased deal making activity in the coming quarters,” said Shanthi Vijetha, Partner, Growth, Grant Thornton Bharat.

India, however, continues to be an attractive market for investors to capitalise on.

“A resurgence in deal values is anticipated, reflecting the potential of the Indian market,” Vijetha added.

In the private equity (PE) space, 521 deals were recorded, totalling $16.4 billion, representing a 40 per cent decline in volumes and a 35 per cent decline in values.

In the first half, there were 11 initial public offering (IPO) deals worth $1.4 billion. This represented a 35 per cent decrease in the number of deals and a 77 per cent decrease in the total value compared to the same period in 2022, the report mentioned.