Global investment funds target India, despite M&A activity decline

Despite a significant decline in mergers and acquisitions (M&A) activity, India continues to attract a substantial portion of the global investment funds pool, which currently stands at approximately $2 trillion. Anu Aiyengar, the global head of M&A at JPMorgan Chase & Co. (NYSE:), reported on Monday that between $100 billion and $150 billion is being targeted towards India.

India’s rapid GDP growth, successful exits by financial sponsors, and robust sectors including technology, healthcare, and infrastructure are contributing to this appeal. However, there has been a stark downturn in M&A activity in 2023 across various industries globally. In India specifically, the total value of M&A deals year-to-date stands at $33 billion, reflecting a nearly 72% drop compared to the same period in 2022. This slump contrasts sharply with the previous year’s record volume driven by large-scale transactions such as HDFC Bank Ltd.’s all-stock merger with Housing Development Finance Corp.

Despite the challenging environment, JPMorgan has managed to secure second place globally for M&A volume year-to-date, moving up from third place in 2022. Aiyengar indicates that alongside tech and healthcare, infrastructure and energy transition have emerged as strong investment themes driving M&A activity in India. Several funds are now being established exclusively for infrastructure investments due to its substantial spending in the country.

In addition to M&A activity, the initial public offering (IPO) market in India is showing signs of revival. Aiyengar predicts that dual track dealmaking—a strategy where asset owners consider either IPOs or M&A deals for their holdings—will be an option for companies seeking exit opportunities. She remains optimistic about companies’ ability to successfully navigate both private and public markets for their exits.

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