Deal activity plunges 87% YoY in May to $4.6 bn in value, 45% in volume

Deal activity fell 87 percent in May to $4.6 billion in value and 45 percent in volume to just 106 deals, according to an industry report.

Industry tracker Grant Thornton said Monday that May 2022 saw four multibillion-dollar deals totaling $31.5 billion, while the reporting month saw major deals.

The local market is also witnessing a decline in deal activity in the wake of the turmoil in global markets as a whole, especially in the global banking sector and rising interest rates, which led to high levels of volatility and uncertainty in Deal Street, Shanti Vejitha, partner at Grant Thornton said.

Mergers and Acquisitions witnessed a sharp decline in value by 98 percent and a decrease of 45 percent in volume compared to last May, recording only 22 deals worth $ 675 million as there were practically no comprehensive deals, due to global macroeconomic challenges, and fears of Potential stagnation and uncertainty surrounding valuations.

Domestic volumes hit a three-year low with 20 deals, while cross-border activity posted the lowest monthly volume and value to date. The largest domestic deal was Godrej Consumer Product, acquiring Raymond Consumer Care for Rs 2,825 crore (announced in late April and concluded in the report month), and the retail and consumer segment led transaction values ​​for the month at 51 per cent of the total. Mergers and acquisitions.

When it comes to private equity deals, despite a 44 percent drop in volumes and a 45 percent drop in value, the landscape saw 84 deals worth $3.9 billion as startups continued to dominate deal activity, accounting for 55 percent of the size. .

Among the start-ups, the enterprise applications and infrastructure segment witnessed increased activity, followed by the financial technology and retail sectors, which collectively contributed to 67 percent of the volume. Of the total, B2B startups accounted for more than 52 percent of the funding, with a value of $96 million.

The real estate sector also witnessed a rise in the value of deals to $1.4 billion, despite the fact that there were only four deals.

So far this year, deal value has fallen 80 percent to $19.3 billion due to the global economic slowdown and investors’ reluctance to commit their capital in an uncertain environment, while volume is down 46 percent. The year has so far witnessed only three deals in the billion-dollar category and 34 deals that exceeded $100 million, compared to six deals, and 60 of these deals in the same period last year.

Weakness in the IPO market also hindered the market, as the month witnessed only one IPO that raised $390 million, compared to eight issues that raised $4 billion last May. On the other hand, QIP saw two issuances of $42.7 million more than any in May 2022.