India saw a record level of mergers and acquisitions in 2022, as companies sought to consolidate positions, and enter new segments, leading to some of the largest-ever transactions in sectors such as banking, cement and aviation.

The total value of M&A deals in India stood at $152 billion in 2022 (year-to-date) compared to $107 billion in 2021, according to Sonia Dasgupta, managing director and chief executive officer for investment banking at JM Financial.
India has defied the global downward trends in M&A by registering record deals in 2022 since 2018, Dasgupta added.

In 2018, M&A deals were worth $95 billion; in 2019 it was at $60 billion, and in 2020, it was $20.76 billion, JM Financial said, sourcing data for announced transactions from Mergermarket.

“Domestic deals took up a major share of the deals (72% by value and 52% by volume). Technology and financial services accounted for significant deal value representing over 30% of total deal value," she said.

Banking, cement and aviation saw some of the largest-ever transactions.

Besides consolidation, this year’s M&As were also driven by conglomerates’ entry into new businesses, including Adani’s foray into cement and electronic media, and Bandhan Bank entering the asset management business.
In what can be considered the mother of all M&A deals, India’s largest housing finance company HDFC Ltd announced a merger with HDFC Bank in a $40 billion deal, creating a financial services behemoth. The year also marked largest-ever M&A transaction in Indian civil aviation sector, and the largest M&A deal in aviation sector globally since 2013. The deal’s enterprise value was $8.9 billion.

“The merger of Tata’s Air India and Vistara would create the second largest airline in India (in terms of fleet size) with the largest international market share, and the second largest domestic market share. Combined entity would be the only Indian airline group to have both a full-service carrier and a low-cost carrier capturing market demand across segments," said Raj Balakrishnan, co-head of investment banking at BofA Merrill Lynch in India. BofA ML was the lead adviser on both Air India-Vistara and HDFC transactions.

BofA also advised Actis on the sale of its renewable energy platform Sprng to Shell in April, which was worth $1.6 billion.

The cement industry also witnessed a fair bit of action, beginning with Adani’s acquisition of Holcim’s stake in Ambuja Cements and its arm ACC Ltd for $10.5 billion. Dalmia Cement, a subsidiary of Dalmia Bharat, took over the clinker, cement and power assets of Jaiprakash Associates for an enterprise value of ₹5,666 crore.

“Apart from convergence or partnership between traditional brick and mortar businesses with tech-enabled platforms or forced mergers between new-age businesses or venture capital-backed tech firms with cash strapped unicorns, we foresee a series of such transactions where well-capitalized companies will be acquiring or merging with itself loss-making companies to enhance their platform and leverage the capabilities of the target companies," Mahesh Singhi, managing director, M&A focussed firm Singhi Advisors, said.

In 2023, Singhi predicted that beaten-down traditional manufacturing sectors such as metals, casting, forgings, textiles, agro-processing and commodity chemicals would see a new momentum in consolidation to attain scale.

The divestiture of non-core assets will be an interesting M&A theme to watch out for in 2023 as industrial groups would be looking to strengthen their balance sheets, Singhi said.

“Stressed assets through NCLT as well as GoI-led divestments would be another source of M&A deals in India to watch out for," said JM Financial’s Dasgupta.

Competitive sectors like auto components could see the market leaders enter new tech segments such as IoT (Internet of Things), EV (electric vehicle) components, battery management, advance materials and adjacent spaces such as custom manufacturing to diversify their revenue, Singhi added.