India’s financial services deals hit $5.6 billion in Q2 2025

India’s financial services sector recorded 79 transactions valued at $5.6 billion, including IPO and QIP activity, according to the Grant Thornton Bharat Q2 Financial Services Dealtracker.

While overall deal volumes rose by 18% and values saw a modest 5% uptick over Q1 2025, the quarter reflected a measured investment approach amid ongoing global uncertainties and trade tensions.

Fintech continued to lead deal volumes with a 53% share, recording 39 deals worth $657 million — a 22% rise in volumes and 76% increase in values over the previous quarter. Activity ranged from large to micro-ticket deals, highlighting sustained investor interest despite a lack of big-ticket consolidations.

Banking and non-banking financial companies (NBFCs) dominated deal values, contributing 66% ($3 billion across 20 deals), driven by two major investments: Sumitomo Mitsui’s $1.57 billion acquisition of a 20% stake in Yes Bank (M&A) and Warburg Pincus–ADIA’s $862 million investment in IDFC First Bank (PE), together accounting for 81% of the sub-sector’s value.

Excluding public market activity, the sector reported 73 deals valued at $4.5 billion—up 12% in volume but down 10% in value quarter-on-quarter—driven by a sharp 92% fall in domestic deal values. Despite this, high-value activity remained strong, with six deals over $100 million collectively contributing $3.7 billion. The sector continued to play a pivotal role in the deal landscape, accounting for 14% of overall volumes and a commanding 33% of total values this quarter, signalling sustained investor interest in financial services as a long-term growth engine.

“Q2 continued the trend of high deal volumes driven by small-ticket transactions, punctuated by a few notable big-ticket moves—particularly in Indian banking. As consolidation deepens across banks and small finance banks, and regulatory clarity improves, we anticipate more M&A and PE activity in this space,” said Vishal Agarwal, partner, Private Equity Group and Deals Tax Advisory Leader, Grant Thornton Bharat.

“Fintech remains the top draw for investors, while wealth and asset management is emerging as a fast-growing asset class. With interest rates on a downward trajectory and global uncertainties easing, India’s financial services sector is well-positioned to lead deal momentum going forward,” Agarwal added.

M&A activity saw a notable slowdown in Q2 2025, with volumes declining 43% and values falling 35% compared to Q1. The quarter recorded 16 deals worth $2.6 billion, with domestic transactions continuing to dominate volumes despite a 35% dip from the previous quarter.

Interestingly, inbound deals emerged as the key value drivers this quarter, accounting for 88% of total M&A value—the highest share since Q2 2024—largely led by Sumitomo Mitsui Banking Corporation’s $1.5 billion acquisition of a stake in Yes Bank.

Cross-border activity fell 63% in volume, yet delivered an all-time high in value contribution, pointing to a selective but high-ticket approach by foreign investors. Only three transactions surpassed the $100 million mark, but together they made up 94% of overall deal value, highlighting the market’s pivot toward fewer, but strategically significant consolidations.

PE activity surged in Q2 2025, recording 57 deals worth $1.9 billion—marking the highest quarterly volumes since Q2 2022 and the highest values since Q2 2023. This represents a 54% increase in deal volume and an 89% rise in value compared to Q1 2025, largely driven by three high-value deals totalling $1.2 billion.

IPO activity remained subdued in the first half of 2025, continuing the cautious sentiment seen in 2023, as companies held back from public listings amid volatile market conditions and global headwinds. However, the QIP route showed signs of revival in Q2 2025. After recording the second-lowest quarterly performance in Q1 since Q2 2023, QIPs rebounded with six deals totalling $1.1 billion — signalling selective, confidence-led capital raising by established players, even as broader public market activity stayed tepid.