Amid tech layoffs, India Inc witnessed a decline in dealmaking activity, with only 145 deals in January this year at a value of $2.7 billion, according to the latest dealtracker report by Grant Thornton Bharat. India Inc reported 244 deals in January last year. However, when compared to December last year, the deal volumes witnessed a marginal 3% increase, while values declined by 62% due to the absence of big-ticket transactions.

During the month under review, the deal volumes declined by 62% with 26 mergers and acquisitions valuing at $311 million owing to the volatile market conditions and the cautious approach adopted by strategic investors.

"While the segment continued to be dominated by domestic deals, it recorded the lowest monthly values at $311 million since May 2022 at $270 million. The drop in the deal values can also be attributed to the absence of big-ticket transactions that saw only one deal valued over $100 million," the report said.

As per the report, the energy and natural resources sector accounted for 56% of the total values while the IT and ITeS sector drove volumes and recorded eight deals accounting for 31% of total deals. The start-up and retail and consumer sectors accounted for 30% of the volumes.

Shanthi Vijetha, partner- growth at Grant Thornton Bharat, said, "The past year has been a rocky road for the deal activity, with economies witnessing continued shutdowns, salary freezes and layoffs, leaving investors uncertain about their portfolios and future investments. Despite global tensions, India’s macroeconomic outlook continues to remain strong, making it an attractive destination for sector-wide foreign investments. Although the deal momentum in January 2023 did not match expectations and witnessed a declining trend, domestic deal activity is expected to remain at the forefront of M&A activity and PE/VC funds are expected to direct their capital into the attractive Indian market, throughout the year."

During the month, private equity investments recorded 119 deals valued over $2.4 billion. As compared to December last year, the private equity deal volumes witnessed a surge of 28%, whereas the deal values witnessed an increase by 30%.

"PE/venture capital (VC) deals accounted for 82% and 88% of overall deal volumes and values for January 2023, respectively. While PE activity declined, the month gone by still witnessed five big-ticket investments together worth $1.6 billion," the report said.

In terms of private equity deal volumes, start-ups led the chart by accounting for 66% of deals. Driven by two big-ticket transactions in the pharmaceutical segment, the pharma, healthcare, and biotech sector topped the value chart with 38% of deal values. E-commerce emerged as the leading sector both in terms of deal volumes and values, following the start-up and pharma, healthcare, and biotech sectors.

In January only one initial public offering was reported. The IPO of Sah Polymers Limited was valued at $8 million, whereas the qualified institutional placement (QIP) activity remained muted.

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