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Mumbai: India’s M&A activity witnessed a significant 38% increase in CY24, reaching $109 billion, up from $79 billion last year. This surge reflects robust investor confidence in India’s growth story, according to a report by Kotak Mahindra Investment Bank.
Domestic corporates played a substantial role, with their deal contribution almost doubling to $48 billion in CY24, up from $26 billion last year. Notable deals include the merger of Viacom and Disney, Aster DM and Quality Care, and Bharti Group’s acquisition of a stake in BT Group.
After a brief slowdown last year, Indian conglomerates are driving significant activity across sectors, focusing on diversification and strategic expansion. Major M&A deals in CY24 include Adani Group’s buyouts in industrials and infrastructure, Birla Group’s acquisitions in industrials, and Reliance’s acquisitions in TMT and infrastructure, it said.
CY24 saw the highest-ever fundraising in Indian equity capital markets, with $74 billion raised. This momentum is expected to continue, with a $35 billion IPO pipeline. Multinational corporations (MNCs) are increasingly preferring India as a listing destination, listing their Indian subsidiaries or flipping their corporate office to India.
MNCs are also monetizing their holdings, contributing almost one-third of sell-downs in CY24. The year witnessed IPOs and FPOs worth $22 billion, $20 billion of QIPs, and $32 billion of sell-down through block activity.
“That $32 billion is broadly broken into MNCs, Indian promoters, and private equity investors in almost equal proportions. So all three did take benefit of the buoyancy of the market to create liquidity for themselves,” said V Jayasankar, Managing Director, Kotak Investment Banking.MNCs increasingly looking at Indian public markets as a viable monetization route where they have unlocked value worth $10 billion in CY24 against $3 billion in CY23.Hyundai’s success has prompted multiple MNC conglomerates to consider value unlocking through India IPOs.
Hyundai Motor India IPO worth $3.3 bilion is India’s biggest IPO till date. Hyundai Motor shares made a debut on the Indian stock exchanges in October last year and the stock was listed at ₹1,931 on BSE, a discount of 1.5% to the issue price of ₹1,960 per share. Currently, Hyundai stocks are trading at ₹1,786 on BSE.
“We have generally been seeing increased volatility in markets. And we have known this for several decades, that when there is volatility in the primary market, the IPO discounts do tend to go up a little,” said S Ramesh, Managing Director & CEO, Kotak Investment Banking.
Global private equity investors played a key role in India’s M&A market, with deals worth $30 billion taking place in CY24. Buyouts accounted for more than one-third of the total sponsor deal value, at $11 billion.
Deals worth $100 million or more contributed 65% of the total PE deal value over the last five years, indicating a shift towards larger ticket-size deals.
Exits in CY24 were driven by IPOs, secondary sales, and strategic sales. Sponsors have been active in taking money off the table, with seven or eight sponsor-backed companies going public in India.
“Sponsors have been very active towards taking money off the table. And I think of the total number of IPOs that were actually done over the last year, about seven or eight of those were actually sponsor-backed companies, so where the sponsors were promoters,” said Sourav Mallik, Managing Director & Deputy CEO, Kotak Investment Banking.
What has clearly helped build their conviction for India is the fact that they can take these companies public in India, they can sell them at good valuations in the secondary market, he added.
CY24 buyout transactions were led by telecom (24%), followed by pharma and healthcare (19%), enterprise tech, IT services, and SaaS (18%), and infrastructure and energy (14%). Minority transactions were driven by consumer tech (30%), financial services (26%), infrastructure and energy (14%), and enterprise tech (12%).
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