M&A deals jump by 40% to $163 bn in 2022, aided by $57 bn HDFC merger

The $57-billion HDFC-HDFC Bank deal helped the overall merger and acquisition activity in the country rise by 40 per cent to reach $163 billion in 2022, a report said on Monday.

The USD 57-billion HDFC-HDFC Bank deal helped the overall merger and acquisition activity in the country rise by 40 per cent to reach USD 163 billion in 2022, a report said on Monday.

Strategic deals like the one involving the HDFC twins accounted for a bulk USD 126 billion of the overall quantum, while transactions involving private equity funds stood at USD 37 billion, the report by Deloitte, a consultancy firm, said.

Despite global headwinds like rising interest rates and elevated inflation levels leading to increased margin pressures for companies, the firm expects the overall activity to remain "strong" in the ongoing 2023.

The overall M&A (merger and acquisition) deals were much higher when compared with USD 69 billion in 2019, or USD 88 billion in 2020 amid Covid pandemic, and USD 116 billion in 2021, it said.

Going by the number of deals, the figure rose to 911 in 2022, up from 826 in 2021 and 505 in 2020, the firm said.

Mega deals valued at over USD 1 billion more than doubled as the financial services, medical and pharma and construction sectors witnessed some of the largest ever M&A transactions in 2022, it said.

Elaborating on its optimistic view on the deal landscape for 2023, it said rebound in private equity investments, continued growth in strategic deals and rising outbound investments will help the industry have a strong year.

Cross-border transactions fell to USD 50 billion in the overall deal activity, down from USD 74 billion, due to a steep decline in inbound deals.

The firm attributed the fall in inbound deals to problems in the US and UK, where investors focused on conserving cash amid the record high inflation.

From a sectoral perspective, financial services, telecom, media advertisement technology and transport are expected to continue as the mainstay for the activity, it said.