India's M&A and PE deals surge 204 pc to $5.3 billion in Q1: Report

This surge, including 65 deals worth $5 billion alone, represents a 25 per cent increase in deal volume and a staggering 204 per cent rise in value compared to the same quarter last year.

The quarter also saw six high-value transactions of above $100 million, totalling $4.3 billion, significantly higher than the $534 million from four similar deals in the previous quarter. These trends highlight a renewed confidence among investors, positioning India as a preferred destination for capital deployment amid ongoing global uncertainties.

Vishal Agarwal of Grant Thornton Bharat said: "Despite global headwinds and capital market volatility, India’s growth trajectory remains promising. With the Budget 2025 emphasising regulatory simplification and collaborative growth, we expect capex momentum to build, driving consolidation and renewed capital inflows."

"While relatively subdued, M&A and PE activity remained interesting with early-stage and buyouts forming the bulk of the deals, though IPO conversations seem to be somewhat pushed back by a few months. We expect continued interest in financial services and particularly granular and asset-backed credit, fee-based wealth and fund management and insurance sectors," he added.

The M&A landscape recorded a remarkable surge, with 28 deals valued at $4 billion - marking an all-time high in terms of deal volumes and the third-highest quarterly value on record.

The quarter was defined by increased average deal sizes, propelled by four high-value deals totalling $985 million and a landmark multibillion-dollar transaction in the insurance sector: Bajaj Group’s acquisition of a 26 per cent stake in Bajaj Allianz General and Life Insurance for $2.8 billion. Domestic M&A continued to dominate, accounting for 71 per cent of deal volumes and 86 per cent of values, while cross-border transactions reached a new peak in volumes, supported by a rebound in value from Q2 2024.

Though outbound activity remained modest, small ticket consolidations in the UAE and North America hinted at renewed international interest. Notably, the top five M&A deals contributed to 94 per cent of total deal value, emphasising a dealmaking environment.

The private equity (PE) landscape in Q1 2025 remained steady, recording 37 deals valued at $1 billion - a marginal 2 per cent uptick in value over the previous quarter, with stable volumes. While overall momentum has slowed following a year-long growth streak from Q3 2023 to Q3 2024, the sustained interest in India’s credit ecosystem stood out, with Banking, NBFC, and Fintech segments commanding 78 per cent of total deal value. This trend points to investors' growing focus on credit-oriented institutions, even amid increasing caution in dealmaking. Notably, the top five PE deals accounted for 74 per cent of total investments, led by Bain Capital’s $504 million acquisition of an 18 per cent stake in Manappuram Finance Ltd. Despite a more selective investment approach, India continues to attract significant attention as a stable and promising private equity destination.

The capital markets witnessed a subdued quarter in Q1 2025, marked by muted IPO activity - the first such dip since Q2 2023 - and only two QIP issuances totalling $316 million. Despite a strong run last year, QIP activity saw its second-lowest quarterly performance in both volume and value since Q2 2023, reflecting a cautious stance by issuers amid evolving market dynamics. The overall slowdown in primary market activity suggests that companies are taking a wait-and-watch approach, potentially deferring listings and capital raises in anticipation of more favourable market conditions, the report added.