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As with most of the rest of the world, Indian deal-making slowed down in 2023, with a total of US$70.9 billion of deals inked in 2023 as compared to US$192 billion in 2022. Despite the marked decrease in M&A activity, the Indian market continued to be buoyant with a number of sectors still receiving significant investment.

Some of the key deals signed in 2023 include Canada Pension Plan Investment Board's US$5 billion acquisition of a 17% stake in ReNew Energy, Walmart's US$3.5 billion acquisition of a further stake in Flipkart, and Temasek’s US$2 billion acquisition of a majority stake in Manipal Health Enterprise. In terms of domestic M&A, the merger of IDFC Limited with IDFC First Bank led the charge with a deal value of US$2 billion.

India continued to be a key destination for inbound investment, with private capital investors remaining a core part of the Indian M&A ecosystem. The likes of the Qatar Investment Authority, the UAE's Abu Dhabi Investment Authority and GIC made sizeable investments into Indian companies in 2023, which indicates that private capital will, like previous years, continue to be a central contributor to India's growth story.

Outbound M&A held up in 2023, with approximately US$12 billion worth of deals going through, with the Motherson Group acquiring a German automotives company for a total value of US$577 million, Sun Pharmaceuticals making multiple acquisitions in the United States, Israel, and Mexico, amounting to a total value of US$926 million, and Clear Bridge Ventures acquiring a stake in a US-based internet company for US$336 million. Outbound M&A activity remained largely consistent between 2022 and 2023, indicating that Indian companies are not curbing their global deal-making ambitions despite the slowdown in the market.

India continued to be a key destination for inbound investment, with private capital investors remaining a core part of the Indian M&A ecosystem."

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Healthcare, financial services and IT and information technology enabled services (ITeS) were the most favoured sectors for M&A activity in India last year. The IT/ITeS sector saw the most activity, with Indian targets receiving approximately US$15 billion of investment in 2023, the Walmart-Flipkart deal being the largest in this sector by value. IT/ITeS has traditionally been considered one of India's stronger sectors, and it is unlikely that investor interest in this sector will wane in 2024.

The expansion of the healthcare sector in India is a result of increased spending by consumers and the government, as well as higher demand for quality healthcare. M&A in the healthcare sector took place across the entire value chain, reflecting investor appetite to undertake transactions in a non-cyclical sector, for example, Temasek's acquisition of Manipal and Blackstone's acquisition of Care Hospitals in the hospital vertical, to Nirma Ltd's acquisition of Glenmark Life Sciences in the active pharmaceutical ingredients vertical.

Financial services saw the largest total deal value of US$34 billion. Domestic activity was particularly strong in this sector, with the merger of IDFC First and IDFC Bank and the acquisition of Fincare Small Finance Bank by AU Small Finance Bank. 

Interest in the renewable energy sector remained consistent between 2022 and 2023, with both years registering an overall deal value of approximately US$11 billion. With ESG and energy transition being core themes of our 2024 M&A outlook, this sector will be one to continue to watch in 2024. 

Legal trends

The relatively business-friendly Indian Government continues to formulate policies that encourage doing business in India, which has resulted in a number of companies choosing to set up manufacturing facilities in the country. Policies and incentives geared towards electric vehicle and other advanced manufacturing, renewable energy, and medtech have been put in place, including the Product Linked Incentive scheme, and it remains to be seen whether these assist in achieving the Indian Government's goal of inviting US$100 billion of foreign investment in the coming years.

However, the evolving Indian legal landscape may not be the easiest for foreign investors to navigate, given India's relatively recent rise as an attractive destination for foreign investment. For example, competition rules in India now require minority acquisitions to be notified to the Competition Commission of India if certain conditions are met. Changes like these may require investors to tread carefully.

Free trade agreements, like those being negotiated with the UK, Peru, Oman, Australia and Canada might provide a further boost to India's position as an attractive investment location.

Outlook for 2024

India accounted for about 30% of the deal value coming out of the Asia-Pacific region between 2022 and 2023, indicating that it will continue to remain a bright spot in an uncertain global M&A market. Private capital continues to bet on India, with the Abu Dhabi Investment Authority, for example, considering investing up to US$50 billion in India.

Upcoming elections in 2024 might contribute to some uncertainty around the investment climate, but continued economic growth, favourable policies, and a strong pipeline of deal activity (such as the Reliance-Disney deal) should mean India is ready for take-off later in 2024, post-election.

Key contacts

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Roddy Martin

Partner, Global Head of Automotive, Co-Head of India Practice, London

Roddy Martin
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Alan Montgomery

Partner, Co-Head Pharmaceuticals, Co-Head of India Practice, London

Alan Montgomery
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Siddhartha Shukla

Partner, London

Siddhartha Shukla

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India Group Asia Mergers and Acquisitions Roddy Martin Alan Montgomery Siddhartha Shukla