Deal activity in India Inc slows to $40.7 billion due to Covid second wave: PwC

New Delhi [India], Aug 14 : Deal activity in India during the first half of 2021 amounted to USD 40.7 billion across 710 deals, including both private equity (PE) and strategic acquisitions (M&A), according to a report by consulting major PricewaterhouseCoopers (PwC).
A second wave of infections resulted in lockdowns across states, thereby hampering ongoing deal activities, it said in the report titled 'Deals in India: Mid-year review and outlook for 2021 -- resilience and recovery.'
However, various timely policy and credit measures announced by the government to revive the economy and make it more resilient, and a stable banking system, have resulted in the growth of positive sentiments within the investor community.
The deal value of USD 40.7 billion recorded in H1 2021 was 2 per cent higher than H2 2020 when deals worth USD 39.8 billion were recorded despite the unstable economic environment.
However, the deal value in H1 2021 was 14 per cent lower compared to the same period last year. The volume of deals recorded in H1 2021 declined by 12 per cent and 6 per cent compared to H2 2020 and H1 2020 respectively.
PE activity in H1 2021 was at an all-time high at USD 26.3 billion, 19 per cent and 25 per cent higher compared to H2 2020 and H1 2020 respectively, said the report.
The surge in deal activity was fuelled by billion-dollar buyouts and numerous large fund-raising rounds by startups, boosting many of them into the unicorn club.
The report said PE investors are also shifting their focus towards sectors such as technology and healthcare which show stronger potential for growth.
M&A activity remained tepid yet operational largely due to the few mega outbound deals that were recorded in H1 2021. The M&A deals space continues to be dominated by domestic deals with activity worth USD 6.2 billion being recorded in H1 2021.
The report said PE activity kept the momentum going in H1 2021 and recorded deal value worth USD 26.3 billion, up by 19 per cent and 25 per cent from H2 2020 and H1 2020 respectively.
The PE deal value in H1 2021 surpassed the previous comparable periods in 2020 in spite of the large deals closed by the Reliance Group last year, totalling to USD 17.3 billion.
The report said cash-rich Indian businesses and lower interest rates have enabled corporates to engage in overseas acquisitions, especially that of established businesses.
This trend is expected to continue as companies are on the lookout for scaling operations in international markets, acquiring complementary business capabilities and filling the gaps in their existing portfolios through acquisitions at lucrative valuations.
The report said key themes emerging in 2021 due to the uncertainty are growing divergence in asset valuations, the acceleration of deals in digital and technology, and increasing attention to environmental, social and governance (ESG) matters.