Mergers and acquisitions (M&A) in India continued to maintain strong momentum in 2023, outperforming most of the past decade, according to a report by consultancy firm Bain & Co. Despite a global slowdown in M&A activity, Indian companies executed over 90 deals worth approximately $32 billion in 2023, demonstrating resilience and robust deal-making. This performance was slightly below the exceptional numbers recorded in 2022 when 109 deals valued at $118 billion were executed.
Bain & Co.’s India chairman, Karan Singh, attributes this sustained momentum to the availability of attractive opportunities, favorable policies, and heightened activity in sectors with structural tailwinds. Over the past 18 months, one in every three deals in India was observed in sectors such as renewable energy, infrastructure, logistics, and manufacturing.
For 2024, the outlook remains optimistic, with more than 80% of respondents in Bain & Co.’s annual M&A Practitioners’ Outlook Survey anticipating a continuation or an increase in deal activity. Market sentiment is bullish, and dealmakers expect positive trends to persist across various sectors.
Vikram Chandrashekhar, a partner at Bain & Co., notes that in healthcare, for example, deal volumes have consistently grown over the past five years, and the momentum is expected to continue in 2024. He emphasizes the importance of disciplined diligence in the competitive market, stating that it can provide an edge in winning deals and setting the stage for value creation.
Mid-market acquirers with up to $1 billion in revenue played a significant role in M&A transactions in 2023, accounting for nearly half of the deals. These mid-sized companies sought acquisitions to strengthen their market positions. Indian conglomerates also pursued acquisitions to reshape their portfolios and create new avenues for growth.
Reliance Retail, for instance, made strategic acquisitions, including beverage brand Raskik and footwear and apparel retailer V Retail, along with a 51% stake in actor Alia Bhatt’s kidswear brand Ed-a-Mamma. Similarly, Aditya Birla Group’s agrisciences company PI Industries ventured into pharmaceuticals with global acquisitions.
Globally, M&A activity faced headwinds in 2023, with a 15% decline to $3.2 trillion, the lowest in a decade. Factors such as high-interest rates, regulatory scrutiny, and mixed macroeconomic signals led dealmakers to adopt a cautious approach. However, the report suggests that 2024 holds promise, with companies eyeing assets that did not come to market in the previous year.
Les Baird, a global partner at Bain & Co., highlights that a need for liquidity will motivate some sellers, while others will divest assets to reshape their portfolios. As interest rates stabilize, it is expected that the logjam in M&A markets will break, leading to increased competition for assets.
India’s M&A landscape has displayed resilience and strength, bucking the global trend of a slowdown. The outlook for 2024 remains positive, driven by a variety of sectors and a favorable market sentiment that positions India as a key player in the global M&A landscape.
