2020 deal activity crosses 80 billion USD over 1260 transactions: PwC India analysis
This year recorded deal activity worth around 80 billion USD across over 1260 transactions, a 7% increase in terms of value in comparison to last year. However, 25% of this deal value could be attributed to sizable inbound investments in Jio Platforms, as per the PwC India report titled, “Deals in India: Annual review and outlook for 2021.” Still, 2020 recorded 17 deals in the billion-dollar bracket, nearly double the number of such deals (nine) recorded in 2019.
There was foreign direct investment (FDI) worth USD 30 billion in India between April–September 2020, a 15% increase over the same period last year. FDI will continue to play a crucial role in the economic development of India. Apart from supplementing domestic capital, it would also bring in improved governance, operational capabilities and international expertise.
Discussing the deal performance in 2020, Sanjeev Krishan, Partner & Leader – Deals, PwC India, said, “Consolidation continued to drive M&A activity in India, accounting for nearly 50% of the total deal value this year. Given the volatility, uncertainty and complexity of the current times, we expect this to be a continuing trend.”
Annual review of deals in India and outlook for 2021 – A snapshot
- Expectations were exceeded on the PE front as investments worth USD 38.2 billion were recorded in 2020, amounting to nearly the same level of activity in 2019. PE funds are anticipating a bumper year in 2021.
- Education entered the big-billion bracket this year, with PE investments worth USD 1.3 billion, mainly on account of noteworthy investments in Byjus. EdTech has been an area of focus for investors this year, particularly with the pandemic driving the need for continuing education through online/virtual classes.
- Manufacturing will be another key sector going forward, particularly in realising the Government of India’s vision of making India self-reliant. MSMEs will play a critical role in achieving this vision. Additionally, investments in the infrastructure segment would provide much-needed support in transforming India into a global manufacturing hub.
- The investment community expects non-performing assets (NPAs) to spike again, creating a very lucrative opportunity. There has been an infusion of approximately USD 1.5 billion into distressed assets from PE funds this year, a significant increase from last year.
- Investors are increasingly looking to invest in companies that are positioning their capital allocation plans on the proposed investees’ environmental, social and governance (ESG) performance. They are looking to acquire ‘green or clean’ assets, backed by stringent and long-term ESG plans, and many have already started launching impact investment funds and green funds, and engaging in platform play, focusing on sustainability.