PwC India forecasts a significant rise in small to mid-size merger and acquisition (M&A) transactions, alongside growth funding in the Indian market, driven by increasing investor confidence.
A Transforming M&A Landscape
The M&A landscape in 2023 showcased diverse strategies and larger-scale ventures, even as private equity (PE) investments saw an overall decline. According to Sanjeev Krishan, Chairperson of PwC India, the year was marked by high volumes of PE deals, but the most notable transactions were strategic, often involving group-level consolidations. This trend continued into the first quarter of 2024, which saw a resurgence in both deal value and volume.
A PwC report highlighted that the top 10 deals of 2023 included joint venture (JV) buyouts, strategic investments, PE buyouts, and stock mergers, contributing to 21% of the total deal value. Strategic deals, especially those involving domestic consolidations, dominated the top transactions.
Sectoral Leaders and Market Dynamics
Krishan noted that traditional sectors like retail, consumer goods, healthcare, and pharmaceuticals are leading the charge. He anticipates a notable upswing in the Indian market, particularly in small to mid-size M&A transactions and growth fundings.
The optimism surrounding M&A is fueled by three main factors:
- Improving Financial Markets: Increased confidence among investors and CEOs.
- Deal-Making Inflection Point: A buildup in buyer demand and available seller assets.
- Global Megatrends: The need for firms to reinvent their business models, often facilitated through M&A.
Future Prospects and Emerging Sectors
Looking ahead, Krishan highlighted several sectors with promising prospects, including e-commerce, healthcare and biotechnology, renewable energy, electric vehicles (EVs) and their infrastructure, infrastructure development, banking and financial services, IT services, and technology sectors like AI and semiconductors.
He also predicts a shift towards growth funding, a possible revival of venture capital, an increase in controlling stake deals, and a rise in portfolio exits via capital markets and initial public offerings (IPOs).
Transformation in PE Operating Models
Reflecting broader trends, the private equity landscape is also transforming. Krishan expects more buyouts, platform-building, bolt-on acquisitions, and a heightened focus on sustainability and Environmental, Social, and Governance (ESG) integration.
PwC India’s Growth and Expansion
PwC India is aligning its operations with India’s ‘Viksit Bharat’ agenda, achieving a compound annual growth rate (CAGR) of 20-25% across its advisory, assurance, and tax service lines. The firm’s headcount has grown to 27,000 employees, including 700 partners, with a focus on bringing in talent in key areas such as transformation, emerging technologies, Global Capability Centers (GCC), ESG, risk management, and deal-making.
Krishan emphasized that PwC is adapting to ensure it can effectively contribute to India’s development agenda and maintain its growth trajectory in the rapidly evolving business landscape
