M&A, other corporate deals surpass pre-Covid levels in 2022: PwC India report

Despite global headwinds, mergers and acquisitions and other corporate deals in India surpassed pre-Covid levels to reach $159 billion with as many as 2,103 transactions in 2022, a 29 per cent increase from 2021 in terms of value, said a PwC India report.

India demonstrated signs of stable corporate deals defying the trend among most major economies of the world, said the PwC report titled 'Deals in India: Annual Review 2022'.

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Mergers and acquisitions accounted for a major share of the deal value, boosted by more than 20 large transactions, and reached a record high of $107 billion -- almost twice that of 2021.

"However, excluding the HDFC Ltd and HDFC Bank merger (worth $60 billion), M&A deal values were about 15 per cent lower than that of 2021. Private equity (PE) investments stood at $52 billion, 22 per cent lower than 2021 but 20 per cent higher than all other preceding three years in terms of value and quantum," it said.

It is to be noted that deal activity witnessed a steady decline quarter-on-quarter after a strong start in the initial months of 2022, the report said, and 70 per cent of deal activity in terms of value and volumes was witnessed in the first half of 2022, with only 30 per cent activity in the second half of 2022.

"The year 2022 has shown us that investor perspective on India is long-term, and the current market slowdown, while tough, will likely not result in major concerns for most. We believe M&A will be an essential instrument for companies to move forward, integrate supply chains, beat disruption and boost their market share," said Dinesh Arora, Partner & Leader – Deals, PwC India.

On M&A activity, the report said 72 per cent of disclosed deal value was generated from domestic deals in 2022 (88 per cent, if the HDFC merger deal is considered). Companies sought to consolidate positions, curb competition and enter new disruptive segments, leading to some of the largest-ever transactions in the banking, cement and aviation sectors.

Sectors such as financial services, technology, healthcare, energy and power, and industrials are expected to stay active on the domestic front in terms of value creation and market share gain.

On PE activity, it said early-stage deals saw an uptick in deal value by 13 per cent compared to 2021, reflecting investor confidence and the outlook for the Indian startup sector, while buyouts and late-stage deals witnessed a 55 per cent and 33 per cent dip in deal value, respectively, compared to 2021.