Buoyed by rising stock markets, rich corporate balance sheets, robust earnings, and an appetite for growth, Indian M&A is flipping the trend seen across the rest of Asia-Pacific and even the world.

While deal values in the region are down about 27% year-on-year(YoY) to around USD 820m in the year to date (YTD; as at 16 November), the value of Indian deals is up a remarkable 91% to USD 172bn, almost double the previous record of USD 94bn in 2021 YTD.

The country is currently second only to China as a target destination. Indeed, every other lead M&A destination in APAC has recorded falling YoY value in 2022 YTD.

Made in India

Deal count, too, has taken off in India, rising 45% from last year to 1,025 in 2022 YTD. Of this figure, around 796 transactions have involved domestic buyers, spending a record USD 150bn, or 88% of the total pie, to acquire at home.

Nine of the top-10 acquirors are Indian conglomerates, working across finance, telecommunications, and construction. Their deals offer insights into the buyers’ long-term view of India as a growth engine.

• Bank HDFC [NSE:HDFCBANK] put USD 60bn on the table to land Housing Development Finance in the country’s largest merger between a bank and a housing finance firm.
• Conglomerates Reliance Industries [NSE:RELIANCE] and Bharti Airtel [NSE:BHARTIARTL] spent USD 11bn and USD 5.4bn, respectively, to acquire 5G spectrum sold by the government of India.
• Ports, logistics and energy player Adani Enterprises [NSE:ADANIENT] shelled out USD 8.8bn for a stake of almost 89% in Ambuja Cements [NSE:AMBUJACEM], making it the second-largest cement player in the country by capacity.

Boosted by these deals, the top Indian targets by sector have been in financial services, telecommunications, and technology.

By comparison, overseas buyers led by the US, Canada, the UK, and the UAE have together acquired some USD 21bn of Indian assets, down marginally from USD 23bn in 2021 YTD.

More to come

Indian suitors are likely to continue investing in the country for as long as earnings are high, markets are buoyant, and appetites remain. Overseas investors may also pour money into India as interest rates rise at home and they look further afield for growth.

Potential domestic suitors include Reliance Retail and Aditya Birla Fashion and Retail [NSE:ABFRL], with both in the running to acquire a stake in financial sponsor-owned TCNS Clothing, according to an October report by this news service.

Financial suitors include wealth management firm Anand Rathi Wealth [NSE:ANANDRATHI] as it seeks inorganic growth to complement its strategy, while kitchen essentials group Adani Wilmar [NSE:AWL], which just acquired a US-based company, could seek further deals in India and abroad.

Pharma players that could seek both local and overseas deals include Piramal Pharma as it scouts for complex generics, while IVF chain Indira IVF is in talks to acquire IVF clinics in South India, as per media reports.

With these deals in the pipeline, India seems set to have another roaring year in 2023. Only time will tell if it will be as good as this one.