India Inc recorded deals worth $25.1 billion in private equity and venture capital investments in the first six months of 2022, a 41.6% decline compared to $43 billion seen in H1CY21, according to a Grant Thornton report.
However, the number of deals has risen on a year-on-year basis with H1CY22 seeing 865 deals compared to 856 in H1CY21.
The “Grant Thornton Bharat Dealtracker Report” notes a decline of 12% in private equity investments and 15% in venture capital deployments during the period mentioned above.
The report cited multiple issues including the current geopolitical turmoil, global equity volatility, concerns around rising commodity costs and inflation as reasons for the fall in deal number and value.
Though deal value saw a decline, large funds like Tiger Global, Westbridge, Baring PE, TPG, Brookfield, Blackstone and Warburg Pincus have continued to keep up with their activity.
The startup ecosystem attracted the most investment at $5.1 billion across 550 deals, recording a growth of 69% in deal values. The period also witnessed the minting of 16 unicorns GlobalBees; LEADschool; Darwinbox; Mamaearth; Xpressbees; ElasticRun; Livspace; DealShare; Perfios; Oxyzo Financial Services; CredAvenue; Open; Leadsquare; PhysicsWallah; Play Games24x7 and Purplle.
A unicorn is a privately held startup with a valuation of over $1 billion.
Followed by the startup space, the e-commerce sector came next and pulled in $5.2 billion across 109 deals and the media and entertainment sector saw investments worth $2.8 billion.
“Despite the worsening macro-economic factors, the PE space in India continued the trend of growth, with both PE deal volumes and values growing by 36% year-on-year. The startup space attracted the most investment ($5.1 billion across 550 deals), recording a growth of 69% in deal values, followed by the e-commerce sector, which pulled in $5.2 billion across 109 deals; the media and entertainment sector, which received investments worth $2.8 billion, growing by a whopping 384% and the energy and natural resources sector, which grew by 337%,” said Dinesh Anand, national managing partner – risk, private equity & ESG, Grant Thornton Bharat.
He added, “Key sectors which had seen major investment growth in recent years but saw a decline in H1CY22 were IT & ITeS (investment values declined by 51%), pharma, healthcare and biotech (investment values declined by 22%) and retail and consumer sector (investment values declined by 43%).”
Bodhi Tree’s $1.8 bn investment in Viacom18 Media makes it the largest funding round this year. Nithia Capital’s acquisition of stressed Crest Steel and Power has been completed under an insolvency process in partnership with Amalgam Steel in the manufacturing sector.
Wiz Freight and Pixxel witnessed large Series A funding rounds in the Indian logistics and space technology, respectively. Dr Agarwal raised $138 million in the largest private equity deal in the eye care space in India. Indinfravit’s acquisition of five operational road assets from Brookfield was one of the largest acquisitions in the highways sector in recent times.
The first half of the year also saw several debuts of foreign funds in the media space with March Gaming and WestBridge Capital making their debuts in the sector. Tiger Global made its first investment in a startup which is still at the pre-product stage with an investment in Shopflo.
The M&A (Mergers and Acquisition) space witnessed a significant increase in H1 2022 witnessing 284 deals while representing a 27% growth over H1 2021 and a 3% increase over H2 2021. Driven by HDFC Bank and HDFC Ltd’s merger for $40 billion, the financial services sector accounted for 53% of total M&A deal values for the year. This deal also marked the biggest deal in the M&A banking sector globally. This deal alone accounted for 50% of the overall M&A deal values for the year.
The sector also witnessed Axis Bank’s acquisition of Citigroup Inc.'s Indian consumer businesses for $1.6 billion.
The IT sector accounted for 24% of deals. The sector with 43 of the 51 deals is valued at $19.2 billion. Driven by India’s largest-ever acquisition in the infrastructure and materials space, Adani Group’s acquisition of Holcim’s Indian Assets for $10.5 billion, also marking Adani Group’s largest-ever acquisition, the manufacturing sector dominated 18% of overall M&A deal values for H1 2022.
Adani Group executed seven deals during the year across seven distinct sectors. The manufacturing sector also witnessed US-based Southco, Inc.’s first investment in India with the acquisition of Darshan Industries.
