As businesses attempted to consolidate their positions and expand into new markets, India had a record number of mergers and acquisitions in 2022. Some of the largest-ever transactions occurred in industries including banking, cement, and aviation.
Sonia Dasgupta, managing director, and chief executive officer for investment banking at JM Financial, estimates that the overall amount of M&A transactions in India was $152 billion as of the beginning of 2022, up from $107 billion in 2021.
By recording record agreements in 2022 since 2018, Dasgupta continued, India has resisted the worldwide M&A negative trends.
According to statistics for announced transactions from Mergermarket, M&A agreements were valued at $95 billion in 2018, $60 billion in 2019, and $20.76 billion in 2020, according to JM Financial.
“Domestic deals took up a major share of the deals (72% by value and 52% by volume). Technology and financial services accounted for significant deal value representing over 30% of total deal value,” she said.
The biggest transactions ever were seen in the banking, cement, and aviation industries.
This year’s M&As were fueled by consolidation as well as conglomerates’ expansion into other industries. Examples include Adani’s entry into the cement and electronic media industries as well as Bandhan Bank’s entry into the asset management industry.
“The merger of Tata’s Air India and Vistara would create the second largest airline in India (in terms of fleet size) with the largest international market share, and the second largest domestic market share. The combined entity would be the only Indian airline group to have both a full-service carrier and a low-cost carrier capturing market demand across segments,” said Raj Balakrishnan, co-head of investment banking at BofA Merrill Lynch in India. BofA ML was the lead adviser on both Air India-Vistara and HDFC transactions.
The largest home financing business in India, HDFC Ltd, announced a merger with HDFC Bank in a $40 billion deal, establishing financial services giant, in what might be regarded as the mother of all M&A deals. The year also saw the largest M&A transaction in the history of Indian civil aviation and the largest M&A deal worldwide since 2013. The enterprise value of the transaction was $8.9 billion.
Additionally, BofA assisted Actis in the $1.6 billion sale to Shell in April of its renewable energy platform Sprng.
A lot of activity was also seen in the cement sector, starting with Adani’s $10.5 billion purchase of Holcim’s interest in Ambuja Cements and its subsidiary ACC Ltd. For an enterprise value of $5,666 crore, Dalmia Cement, a division of Dalmia Bharat, acquired the clinker, cement, and power assets of Jaiprakash Associates.
“Apart from convergence or partnership between traditional brick and mortar businesses with tech-enabled platforms or forced mergers between new-age businesses or venture capital-backed tech firms with cash strapped unicorns, we foresee a series of such transactions where well-capitalized companies will be acquiring or merging with itself loss-making companies to enhance their platform and leverage the capabilities of the target companies,” Mahesh Singhi, managing director, M&A focussed firm Singhi Advisors, said.