HORIZONS | BDO'S GLOBAL VIEWOF MID-MARKET DEAL ACTIVITY 41
INDIA M&A CONTINUE TO REMAIN BUOYANT DESPITE GLOBAL UNCERTAINTIES
In Q1 2022, there were 111 deals completed in India’s mid-market M&A segment, a significant increase from the 68 deals completed in Q4 2021. In value terms, India’s recorded deals soared to USD 10,038m in Q1 2022 compared to USD 7,739m in the previous quarter, representing a rise of almost 30%. PE firms are now becoming increasingly important in India’s mid-market M&A, accounting for 47% of total deal volume and 53% of total deal value in the quarter. POLITICAL AND ECONOMIC BACKDROP The Indian Budget 2022, presented by the Honourable Finance Minister in February 2022, was not a significant one in terms of tax reforms. However, it included macroeconomic level growth with a significant focus on infrastructure. The budget estimated India’s economic growth at 9.2% for the financial year ending March 2022 (and that includes two waves of the pandemic), the highest among all large economies and growth of 8%-8.5% is expected during FY23.
Like the rest of the world, India’s economy is just emerging from the pandemic and its related consequences but the recent geopolitical crisis that resulted from the Russian invasion of Ukraine has created worldwide uncertainties such as rises in inflation, supply chain disruptions and high levels of volatility in stock markets, causing concerns over countries’ economic recoveries. Other than the humanitarian concerns, the major impact of war has been a sharp rise in crude oil prices and its related effects. Many experts are worried that the impact on the Indian economy could be severe as India imports up to 85% of its crude oil needs and the surge in international oil prices to a 14-year high could disturb the country’s balance of payments. India also imports items like gems and jewellery, fertilizers and edible oils from Russia. Though India's involvement in the conflict has been limited so far, the increasing sanctions against Russia could be a cause of concern given its strong strategic, military, and economic relations with India. Some of the other areas which could feel the impact are:
BIG PICTURE
• Q1 2022 deal volume climbs to 111 deals from 68 in the previous quarter while deal value rises by almost 30% • PE activity steps up, accounting for 47% of total volume and 53% of total value • TMT remains the leading sector by a considerable margin, with 51 deals in the quarter.
PE/TRADE VOLUME &VALUE
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14000
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120
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60
40
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20
2000
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0
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2021 2022
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