India Inc witnessed a 92% increase in investment value to $9.4 billion with 441 deals recorded until March end of 2021, against 299 transactions totalling $4.9 billion in the first quarter of the current year 2021, Grant Thornton Bharat’s Dealtracker report said.
The deals rose on the back of 25 high-value private equity investments at over $100 million or more, the quarter witnessed 99 deals valued between $10–99 million, against 13 and 65 deals in Q1 CY2021.
In total India Inc recorded 608 transactions totaling $13.3 billion in Q1 2021, up from 408 transactions worth $12.1 billion in Q1 2021. While deal volumes climbed by 49%, deal values only increased by 9% as compared to Q1 2021.
In comparison to Q4 2021 (October-December), Q1 2022 (January-March) saw a 9% and 27% drop in overall transaction activity, respectively, while Q4 2021 had two billion-dollar deals and 39 agreements valued at and over $100 million each, compared to no deals and 35 deals, respectively, in Q1 2022., the report noted.
The top 11 private equity deals, which included BYJU's $800 million round led by its founder and Swiggy’s $700 million round, accounted for 2% of total PE deal volume and 39% of overall PE deal value.
Startups saw a deal volume of 283 transactions valued at $2.9 billion in the quarter, ecommerce was the dominant segment at 60 deals with a value of $3.24 billion.
IT and (ITeS) Information Technology enabled services came in second with 20 deals worth $452 million.
The quarter also witnessed the emergence of 11 unicorns (startups valued at over $1 billion) across sectors compared to two unicorns in Q1 CY2021.
11 unicorns include Thrasio-styled start-up GlobalBees which was the second such firm to become a unicorn after Mensa Brands. LEAD school (education), Darwinbox (HR tech), Mamaearth (ecommerce), Xpressbees (ecommerce logistics), ElasticRun (logistics), Livspace (interior design marketplace), Dealshare (retail tech), Perfios (data analytics) and fintechs Oxyzo Financial Services, Credavenue turned unicorn in the current quarter.
Several international firms made their first investments in this quarter, including March Gaming's investment in Rooter Sports, followed by MBX Capital's backing of smiles.ai.
In February NovaBenefits raised an undisclosed sum from Indian-American entrepreneur and investor Naval Ravikant-backed AngelList Early-Stage Quant Fund in the same month Octave Ventures' debuted with investment in blockchain firm TRST01. Dutch impact fund IDH FarmFit invested in end-to-end dairy technology solutions provider Stellapps Technologies.
“Further, the emergence of unicorns at an unprecedented pace and the increasing investments coming in from overseas investors is also a testament to the growing PE sector.
This record deal activity was driven by increasing demand for digital commerce, as ‘no touch’ economy theme continues on the back of continued internet penetration, increased consumer outreach and digital adaption and transformation of businesses,” Shanthi Vijetha, Partner - Growth at Grant Thornton Bharat said.
Mergers and acquisitions (M&A) activity during the period recorded more than double the volumes, registering 167 deals, while values declined by 46% to $3.9 billion as compared to the corresponding period last year.
While some strategic buyers were motivated by the plethora of available assets and low cost of capital, many jumped into the fray to stay competitive.
The larger deal included Google announcing a $700 million investment in Bharti Airtel for a 1.28% stake. In addition to up to $300 million towards potential multi-year commercial agreements. This is Google’s second investment in an Indian telecom service provider after Reliance Jio and is part of its $10 billion India digitisation fund.
Driven by Tech Mahindra’s acquisition of CTC followed by Netcore’s majority stake acquisition in Unbxd Inc for $100 million, the IT sector topped the M&A value chart for Q1 2022 recording 34 deals valued at $825 million.
The sector was dominated by deals in IT solutions, 53% of IT sector volumes, followed by the software development segment with 32% of IT sector volumes.
The Reliance group of companies completed eight deals across seven sectors in the quarter; Curefoods completed six deals, all in the direct-to-consumer food segment; Thrasio style companies, such as Upscalio, completed five deals in the retail segment; and Evenflow and Mensa brands completed four deals each.
Four deals were also registered by the good Glamm Group in the startup, media and entertainment, and retail sectors. Additionally, Shiprocket and IndiaMART each closed four transactions to grow globally and create synergies.