Indian businesses witnessed record-breaking M&As in 2023
Although the overall outlook for private equity (PE) and mergers and acquisitions (M&A) activities for this year looks optimistic in India, this is dependent on geopolitical factors across the globe, according to a report by Nishith Desai Associates (NDA), an Indian consultancy with global network.
With the 2024 elections looming both in India as well as the US, deal activity in the short term may slow down.
However, M&A and PE activity in India is expected to remain robust in 2024 with India’s importance as a global player and its relative stability in the face of global headwinds.
This is seen by the projected stability of the Indian Rupee in 2024, India’s emergence as the new back office to the world among tighter global markets as well as favourable global trends such as offshoring, digitalisation and energy transition.
“That being said, the number of large deals may potentially decrease in the short term and may be replaced by relatively small and mid-size deals taking up the centre stage,” said the consultancy in its market outlook dated 23 Jan 2024.
2023 was a year of unexpected headwinds, such as the hiking of interest rates by governments across the world, the banking sector instability in the US and Europe, the Russia-Ukraine and Israel-Hamas conflict, to name a few.
Yet, despite the geopolitical and economic uncertainty that plagued 2023, the Indian business landscape witnessed a record-breaking M&A spree, with a 72% increase in deal volume compared to 2022 and the total value exceeding a massive US$150,000,000,000 (United States Dollars One Hundred Fifty Billion).
It cited a report by Goldman Sachs stating that even the global economy “outperformed their optimistic expectations in 2023”, and their forecast for 2024 predicts an increase in growth figures from the previous year.
Factors such as stabilisation of interest rates, growing convergence between buyer and seller pricing expectations and availability of dry powder particularly held by sovereign wealth funds (SWF), PE and venture capital investors will propel deal making activity in 2024.
These factors, compounded with India’s increasing importance in the global economy, predict a bright future for inbound M&A and PE activity in India, particularly in areas such as digital transformation and technology, decarbonisation and renewables, pharmaceuticals and healthcare, financial services and real estate and infrastructure.
“Against this backdrop, we analyze trends which will potentially impact deal-making in India in 2024, taking cues from important commercial and legal developments which we expect will play a significant role in shaping cross-border deal negotiation, structuring and documentation,” said NDA. Fiinews.com
