India Witnessed Record Rs 6.5 Lakh Crore Of Mergers & Acquisitions In Last 12 Months; HDFC At #1 Position

The latest updates reveal that bankers in India recorded their best-ever quarter for mergers and acquisitions, at the same time deal making else where became slow.

Pending And Completed Deals

During the second quarter, the country witnessed $82.3 billion pending and completed M&A deals.

Which is so far  the highest amount on record, as per the data and also more than twice as much as the previous record of $38.1 billion in the third quarter of 2019. 

At the same time, the M&A volume in the quarter reached $827.6 billion globally, down 8.7% from the same period in 2021.

How Did This Happen?

Basically, this surge in India was dominated by HDFC Bank Ltd’s $60 billion all-stock purchase of Housing Development Finance Corp. in April.

The deal combined India’s most valuable bank and largest mortgage lender in the country’s biggest ever M&A transaction. 

This also illustrates how India’s flagship companies, facing disruptive trends such as the rise of fintech and climate change, are turning to dealmaking as a tactic to dramatically reshape themselves.

How Does This Affect The Economy?

The chairman and chief executive officer for Goldman Sachs Group Inc. in India, Sonjoy Chatterjee said, “While conglomerates will consolidate to become stronger and gain market share in their core sectors, there will be renewed or new initiatives around two big themes: ESG and digital,”. 

Adding, “The second in particular is a focus for all companies, no matter the sector. There won’t be a strategy going forward that doesn’t provide a clear path to deliver this,”.

Another event is the combination of Mindtree Ltd and Larsen & Toubro Infotech Ltd.

The two software firms are controlled by engineering conglomerate Larsen & Toubro Ltd., in a $3.3 billion all-stock deal which was announced in May.

 This deal is a good indication of how India’s largest firms are positioning themselves for a changed landscape in technology, aided by volatility in the markets.

If we keep aside the HDFC megadeal, still India’s second quarter would rank as its fifth-best quarter on record.

It is because of the transactions such as billionaire Gautam Adani’s $10.5 billion deal to buy Ambuja Cements Ltd, giving his conglomerate a sizable presence in the industry.

Increasing Appetite Of Strategic Investor

According to the head of corporate coverage and advisory at BNP Paribas, SA in India, Ganeshan Murugaiyan, “The appetite of strategic investors has definitely increased, with market correction resetting the valuations in India,”.

It appears the Indian firms leading the shift to renewable energy as they were among the biggest dealmakers. 

For instance, Shell Plc agreed to buy renewable power supplier Sprng Energy Pvt for $1.5 billion in April.

Similarly, French oil giant TotalEnergies SEE purchased a 25% stake in Adani New Industries Ltd. this month. 

The next wave of deals are expected to hit in the mid-market, where a cohort of aging founders is starting to hand the reins to their offspring.

Chatterjee said, “Regularly, we find the next generation has interests in other themes, particularly tech platforms and ESG,”. 

Further adding, “Themes coming out of the pandemic have revised perspectives and choices around what the next generation want to do with their futures — in a very personal way.”