India Q3 clocks record 597 deals worth US$ 30 billion: Grant Thornton Deal Tracker Report

Market sentiment in India has been up all quarter, and the results are in.

According to Grant Thornton Bharat Deal Tracker, India reported a record 597 deals amounting to US$ 30 billion in Q3 2021, in sync with the upbeat market sentiment. The quarter also witnessed the highest number of IPO issues in over a decade with 18 issues amounting to US$ 5 billion.

The year so far has recorded a deal value of US$ 73 billion across 1,454 deals, 25% higher than YTD 2020 with US$ 58.5 billion. The sustained economic growth is being owed to rapid growth in the services sector and accelerated manufacturing activities.

2021 has seen greater resilience, digital insurgency, and inventions driving the deal activity in the recent months. The year witnessed growth every quarter and we expect the trend to continue for the coming quarters. The monthly expansion in services and manufacturing activity coincided with relatively low new COVID-19 cases and enhanced pace of vaccinations across the nation

“2021 has seen greater resilience, digital insurgency, and inventions driving the deal activity in the recent months. The year witnessed growth every quarter and we expect the trend to continue for the coming quarters. The monthly expansion in services and manufacturing activity coincided with relatively low new COVID-19 cases and enhanced pace of vaccinations across the nation,” said Shanthi Vijetha, Partner, Grant Thornton Bharat.

Read more: Ecosystem: Investors of rep queue up as FinTech India startups innovate & spread

In comparison with the same period in 2020, there has been an 86% increase in deals in Q3 2021. While deal volumes saw a substantial increase, the quarter witnessed a robust 31% increase in values.

Corporate and private M&A continued their momentum with megadeals that led to deals as high as US$4 billion and 50 deals of over US$ 100 million each during the quarter.

M&A Dealscape

For Q3 2021, M&A deals were valued at US$ 12.8 billion, a 10% decrease compared to Q3 2020. The dip in deal values was due to the absence of high-value deals during the said time. While the IT sector dominated the M&A deal values with US$ 5.2 billion worth deals, startups drove the volumes.

Cross-border deal activity, especially inbound acquisitions, have been encouraging. They were driven by large ticket transactions valued at US$ 7.9 billion compared with US$ 120 million worth of deals executed in Q2 2021 across seven deals.

Read more: 2020-2021 medtech & health M&As indicate long term stability to fight future battles

Q3 2021 witnessed two magnificent inbound transactions, PayU’s acquisition of Billdesk for US$ 4.7 billion and Sumitomo Mitsui Financial Group’s acquisition of Fullerton India Credit Company for an estimated US$ 2 billion. These two deals accounted for over 52% of the total M&A values in Q3.

Generally, there were six high-value deals worth more than US$ 500 million in Q3 2021 adding up to US$ 9.2 billion. Still, a good chunk of the M&A deal values were propelled by smaller-ticket deals. Other sectors such as banking and financial, telecom, e-commerce, energy, and infra sectors too saw high-value transactions.

Private Equity Deals

Propped up by the substantial rise in both volumes and sizes, the PE deals saw healthy growth in Q3 2021 with high deal activity in volumes and values at US$ 17.1 billion, across 486 investment rounds.

Both volumes and values doubled in comparison to Q3 2020. Compared to the previous quarter, the volumes rose by 44% and values witnessed a robust 24% growth. The heightened PE deal activity shows investor confidence in India’s growth story in spite of the pandemic. As many as 11 unicorns emerged during the quarter.

The heightened PE deal activity shows investor confidence in India’s growth story in spite of the pandemic. As many as 11 unicorns emerged during the quarter

Startups claimed a major share in deal volumes at 64%, while e-commerce trumped in deal values with 30% share. Retail and consumer, education and pharma sectors remained active together constituting 11% of PE volumes. High-value investments were also witnessed in sectors such as IT, telecom, education, banking, media and entertainment, energy, manufacturing, hospitality and pharma.

IPOs and Qualified Institutional Placement (QIPs)

The year saw businesses raising the highest amount through the IPO route in over a decade for the YTD period, with 42 issues amounting to US$ 10.3 billion. Despite the impact of the COVID-19 pandemic, the country experienced a record number of IPOs this year.

Despite the impact of the COVID-19 pandemic, the country experienced a record number of IPOs this year

Q3 2021 recorded the highest number of issues in any given quarter, since 2011, with 18 issues amounting to US$ 5 billion.

There has been a trend reversal in 2021 compared to 2020 when QIPs dominated the market. YTD 2021 recorded 28 QIPs issues amounting to USD 5.2 billion, 43% lower fundraising. Issue volumes on the other hand recorded the highest for the YTD period since 2011, Q3 however, saw only seven QIP fundraises.