After a year of decline, mergers and acquisitions (M&As) in India have increased by 13.8% in the first nine months of 2024, reaching a total of $69.2 billion, compared to $60.8 billion in the same period last year. Based on statistics from Bloomberg, the increase was primarily marked by Indian companies and PE firms, as data reflected 2,301 transactions between January and September, compared to 1,855 in the comparable period the previous year.
The M&A activity chart leader was Bharti Airtel. With a stake in the British telecommunications group BT Group, valued at $4.08 billion, the telecom major acquired BT Group’s 49 percent majority stake in the mobile division of the Austrian telecommunications company Österreichische Telekom. Next in line came the significant family settlement transaction between members of the Godrej family. The third biggest deal was Gujarat Gas’s acquisition of Gujarat State Petronet for $3 billion.
According to Bhavin Shah, partner, and leader in private equity and deals at PwC India, the prime reason is that the size and growth potential of the Indian market promise to be more attractive than the mature markets of North America and Europe. “High GDP growth rates and a robust stock market have led to elevated valuations in India,” Shah noted.
Interest rate and inflation dynamics are yet another relevant factor for the M&A environment, affecting the cost of capital, thereby impacting borrowing costs, financing terms, equity stakes, and risk-sharing arrangements, which in turn affect valuations. Volatility in the real exchange rate has also had an impact on cross-border transactions.
Vishal Agarwal, partner at Grant Thornton Bharat, said investment trends across the globe are mixed, with West Asia emerging as a focus area for foreign investment and the West increasingly wary of China. “Despite these dynamics, the Middle East continues to invest in China,” he said.
Agarwal further pointed out that increasing valuations and returns in developed markets make risk-adjusted investments more attractive than in developing markets, including India, where existing valuation multiples are quite high. “Investors generally view the Indian market as well priced, showing a growing interest in early-stage deals and full buyouts, particularly when promoters are hesitant to remain until initial public offerings,” he added.
Private equity funds, in this regard, have become a large part of M&A. Therefore, according to the record made for the first nine months of the year 2024, transactions have reached $24.2 billion. This is about 8.9% higher than that of last year.
