India records highest-ever M&A activity this year at $152bn
In 2022, we saw Indian companies making some big moves despite the global economic slowdown. The deal-making activity was at an all-time high. The country saw mergers & acquisitions (M&A) worth $152 billion in 2022 (year-to-date), according to Sonia Dasgupta, chief executive officer for investment banking at JM Financial. In 2021, M&As in India stood at $107 billion.
Why does this story matter?
- Mergers often lead to economies of scale as resultant large-scale operations tend to make production and operations efficient. On the downside, M&As also have the potential to create monopolies.
- The increase of M&As in India at a time of global downward trends is a welcome sign for the economy. However, whether they will create monopolies or efficient entities is something only time can tell.
Consolidation and entry into new segments drove M&As
The massive increase in M&As this year was chiefly driven by the desire of companies to consolidate their positions. The best example of this is the merger of HDFC Bank and HDFC Ltd. Apart from this, companies entering new segments also fueled M&As in India. Adani's entry into cement and electronic media are good examples of this driving factor.
M&As increased by 42% in 2022
Compared to 2021, the value of M&As in India saw a 42% jump in 2022. In 2020, M&As were worth $20.76 billion; in 2019, it was at $60 billion; and in 2018, it was $95 billion, JM Financial said based on data from Mergermarket. A major chunk—72% by value and 52% by volume—of this year's $152 billion was domestic deals.
HDFC-HDFC Bank merger topped the chart at $40 billion
The HDFC Ltd.-HDFC Bank merger worth about $40 billion topped 2022's M&A chart. This was followed by Adani's acquisition of Holcim's stake in Ambuja Cements and ACC for $10.5 billion. The third on the list is the merger of Tata-owned Air India and Vistara, the largest M&A transaction in Indian civil aviation history. The deal is valued at $8.9 billion.