India Clocks $80 Billion of M&A Activity, PE Deals in ’20: Report

Despite the pandemic, economic slide and geopolitical tensions, deal values in 2020 kept apace with the previous year, reaching $80 billion across 1,268 transactions, according to a PwC India report.

This marked a 7% increase in value compared to 2019.

To be sure, 25% of the deal value was attributable to sizeable inbound investments in just one company, Jio Platforms. In terms of volume, the number of deals dropped significantly from 1,945 transactions last year to 1,268.

Private equity (PE) activity kept pace with last year, recording investments of $38.2 billion.

Domestic consolidation continued to drive M&A activity in India, accounting for nearly 50% of the total deal value. Given the volatility, uncertainty and complexity of the current times, PwC expects this trend to continue, it said in the report.

“The lockdown in India severely impacted almost every sector. Several discretionary consumer businesses in the retail sector struggled to stay above water, creating a number of consolidation and expansion opportunities. Reliance Retail Ventures acquired the retail, wholesale, logistics and warehousing businesses of Future Group for $3.3 billion. The acquisition was the largest domestic deal recorded in 2020,” said PwC.

On the private equity (PE) front, it said the number of buyouts witnessed a sharp decline from 2019. “This could be due to the risk-averse approach adopted by several funds earlier this year, as well as the need for smaller rounds of cash infusion in cash-strapped businesses. Steered by the need for value creation, preservation and enhancement, control will be a key element for most investors in future,” PwC said.

Venture capital funds’ early-stage investments maintained last year’s levels. “Global investors reiterated confidence in India’s startup space as well as entrepreneurial capabilities, and were quick to address any gaps created by international conflicts,” it said.

PE funds infused nearly $5 billion in real estate this year, but 60% of the investment was on account of Brookfield’s and Mitsui’s investments in real estate firm RMZ Corp. Excluding these, investments in real estate remained muted.

Source: LiveMint