The first half of 2024 has been a period of mixed performance for India's mergers and acquisitions (M&A) landscape. The total value of announced M&A deals involving India reached US$ 446.9 million (Rs. 37.3 billion), showing a 4.4% year-on-year (YoY) increase. However, the volume of deals saw a significant decline of 18.4%, particularly affecting the mid-market segment, which experienced a 19% drop in activity. Despite this decline in volume, the period saw notable transactions exceeding US$1 billion each, including the high-profile mergers of Walt Disney with Reliance Industries' media assets and Data Infrastructure Trust with ATC India.

Domestic and Inbound M&A Transactions

Domestic M&A transactions in the first half of 2024 amounted to US$ 206.1 billion (Rs. 17.2 billion), reflecting an 8.8% decrease from the previous year, indicating subdued consolidation within India. In contrast, inbound M&A activity surged to US$ 206.1 billion (Rs. 17.2 billion), marking a substantial 32.4% increase year-on-year. This surge was driven by heightened foreign investor interest, particularly from the United States. Meanwhile, outbound M&A from India totaled US$ 32.3 million (Rs. 2.7 billion), down 29.0% YoY, suggesting a cautious approach by Indian firms towards overseas acquisitions.

Sectoral Focus: Technology, Media & Entertainment, and Telecommunications (TMT)

The Technology, Media & Entertainment, and Telecommunications (TMT) sector emerged as a key focus in the M&A landscape, accounting for US$ 167.7 million (Rs. 14 billion) in M&A activity. This sector's robust performance, more than doubling compared to the previous year, underscores India's strong economic fundamentals and government initiatives promoting digitalization.

Notable Transactions and Strategic Shifts

Despite the overall decline in deal volume, the significant increase in deal value and notable transactions highlight ongoing investor confidence and strategic shifts in the market. The high-profile mergers such as Walt Disney with Reliance Industries' media assets and Data Infrastructure Trust with ATC India exemplify the strategic realignments occurring in the Indian M&A space. These transactions not only reflect the attractiveness of the Indian market but also the strategic importance of consolidating assets in key growth sectors.

Implications and Future Outlook

The mixed performance of India's M&A landscape in the first half of 2024 indicates a complex market environment where value creation and strategic consolidation take precedence over mere deal volume. The surge in inbound M&A activity highlights the growing confidence of foreign investors in India's economic prospects, driven by its strong fundamentals and policy reforms. On the other hand, the cautious approach of Indian firms towards outbound acquisitions suggests a focus on domestic consolidation and strategic realignments within the country.

The TMT sector's outstanding performance is a testament to the digital transformation underway in India. With the government actively promoting digital initiatives and the private sector responding with significant investments, the TMT sector is poised for continued growth, driving M&A activity in the coming years.

Conclusion

India's M&A landscape in the first half of 2024 presents a picture of mixed performance with a notable increase in deal value despite a decline in deal volume. The rise in inbound M&A activity and the exceptional performance of the TMT sector underscore the strategic importance of these segments in the evolving market. As foreign investor interest continues to grow and domestic firms focus on strategic consolidations, the Indian M&A market is set for dynamic changes, reflecting the broader economic transformations underway.

By capitalizing on strong economic fundamentals, policy support, and the growing focus on digitalization, India is well-positioned to attract substantial M&A investments in the future. The ongoing strategic shifts and high-value transactions indicate a robust and resilient market, poised to navigate the complexities of the global economic landscape while fostering sustainable growth and development.