42015590 - Horizons Q2 2022_v06

ISSUE 2 | 2022


KEY SECTORS AND DEALS Looking at sector activity in Q1 2022, TMT led the charge with a 46% share and 51 deals, followed by Industrials & Chemicals with 18 deals and Pharma, Medical & Biotech with 11 deals. Other active sectors included Financial Services, Consumer and Energy, Mining & Utilities. TMT, which has accounted for most of the deal volume in the last three quarters, maintained its major share of mid-market activity. Overall, M&A activity and PE transactions saw high levels of growth and on the whole, the prospects for 2022 look bright. Some of the key deals in the various sectors included:

However, some eminent economists believe that the Russia-Ukraine war will not impact the Indian economy that harshly. In fact, they think that it could have positive aspects for India’s Agriculture industry because Russia and Ukraine combined account for a third of global food grain requirements and, as the war intensifies and more sanctions are imposed, there will likely be import blockades for other nations, which India could be in a position to take advantage of. In addition, India’s federal bank governor Shaktikanta Das believes that the war will only have a ‘marginal impact’ on the economy as the country is far better placed today to deal with the challenge of financing the current account deficit. Banks are well capitalised with a system- level capital adequacy ratio at 16 and gross non-performing assets have fallen to a record low of 6.5%. On the M&A front, India remains an attractive proposition for investors with a flurry of transactions, both cross border (inbound) and domestic. An additional potential impact of the war could be Indian multi-national corporations looking to acquire targets based in and around Ukraine.

• Defence – India is hugely dependent on Russia for arms and defence equipment supplies and the sanctions will impact existing deals and contracts • Auto sector – India’s automobile industry is expected to face significant supply shortages because both Russia and Ukraine are key producers of elements such as palladium metal and neon gas which are used in semiconductor chip manufacturing. The ramifications of all this can be seen in higher global commodity prices. Such macroeconomic repercussions could lead to risks of higher levels of inflation, bigger import bills and a widening of the current account deficit. The Economic Survey tabled in Parliament by Finance Minister Nirmala Sitharaman in January 2022 projected that the Indian economy would grow at 8%-8.5% for the financial year 2022-23, which was based on the assumption that crude oil prices would maintain an average rate of USD 70-USD 75 per barrel. As a result of the war, the crude oil price has passed USD 100 per barrel, which could have a consequential impact on India’s growth prospects.



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