INDIA- A market analysis by Venture Intelligence has revealed that merger and acquisition (M&A) activities in the Indian market have gained significant traction in H1 2024, reaching a 4-year high of US$938 million in terms of value.
The report also revealed venture capital (VC) and private equity (PE) deals had gained momentum in the reported period, reaching US$593 million in valuation compared to the US$505 million reported within the same period in the previous year. This represents a 17.4% year-on-year (YoY) growth.
Venture Intelligence suggests the growth is attributed to a paradigm shift in the country’s FMCG sector. Players are shifting from their cautious approach, actively filling portfolio gaps and entering new categories.
The two largest M&A deals are Tata’s acquisitions of Capital Foods and Organic India, valued at US$844 million in total, which reflects the FMCG sector’s appetite for M&A.
Although the number of M&A deals declined by nearly 50% (7 deals reported so far compared to 13 in the previous year), investment and industry experts predict an increase in M&A activities in the second half of the year.
Siddharth Bafna, Head of Corporate Finance at Lodha and Co., said, “I find companies far more open now to deal activity versus earlier as the macro headwinds come off, and the country’s economic growth remains strong.”
This anticipation is due to what industry experts describe as an excitement to seek after a variety of consumer brands.
“And the excitement to invest in good consumer brands is quite high, given that there are strong tailwinds to growth. We are seeing an emphasis back on consumption from an economy perspective, the rural markets are reviving, and the urban markets remain fairly resilient,” Bafna added.
The report also suggests the growth is attributed to significant growth in the rural FMCG market, which is slowly recovering after demand dwindled owing to high inflation. The rural FMCG market overtook the urban FMCG market for the first time in 5 quarters in Q1 2024.
Venture Investments also attributes the surge in activity to the expansion and growth of the quick service retail (QSR) market, which is predicted to grow at a combined annual growth rate (CAGR) of 8.74% in the next five years.
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