Deal Street Hits All-Time High Of $130 Billion In First Half Of 2022 On HDFC, Adani-Holcim Mergers

The mega $60-billion merger of the HDFC twins, the $10.5-billion Adani-Holcim deal along with the $2.7-billion LIC share sale in the June quarter pushed the deal market to an all-time high of $130.3 billion in the first half of 2022, a report said on Wednesday. 

Deals worth $130.3 billion were more than double than the value recorded in the year-ago period, making it the highest semi-annual period since records began in 1980, according to the data tabulated by Refinitiv, an LSEG business.

The April-June quarter of 2022 saw the strongest deal-making activity, pushing the total deal value to a record $130.3 billion in the first half of the year, which is more than double the year-ago period and sets an all-time semi-annual record by value and number of announced deals since 1980, the report said.

The report attributes the numbers to the significant growth opportunities in the overall market and domestic consolidations bolstering Mergers and Acquisitions (M&As), which was led by the $60.4-billion merger between HDFC Bank and its parent Housing Development Finance Corporation, making it the largest-ever deal on record in the country.

The number of deals grew 30.3 per cent in the year and saw the busiest-ever period. Target India M&As totalled $122.6 billion, up 123.8 per cent from the same period last year, says the report.

A notable theme is the growing M&As involving renewable energy and sustainable sectors, which totalled $11.5 billion so far this year, which is 41.7 per cent more than last year's. And the biggest among them is the $10.5-billion deal struck by the Adani group to buy out the Indian assets of the global cement major Holcim— ACC and Ambuja Cements.

However, inbound M&As fell 14.6 per cent to $21.5 billion. The US was the most active foreign acquirer in India with $11.3 billion worth of deals, which was down 7.9 per cent on the year and accounted for 52.3 per cent of the inbound M&As.

Outbound M&As on the other hand totalled $6 billion, 73.6 per cent higher in value, making it the highest first-half period since 2010. The US was the most targeted nation in terms of value from Indian companies with 31 deals worth USD 4.1 billion, or 67.7 per cent of the total, it said.

This was driven by the $3.3-billion pending acquisition of US-based Biosimilars Business of Viatris Inc by Biocon Biologics, making it the largest-ever Indian outbound acquisition in US healthcare.

According to the report, the majority of the deal-making activities involved the financial sector which totalled USD 69 billion, a five-fold increase in value from a year ago and captured 53 per cent market share.

The technology sector, which saw the maximum number of deals, totalled $16.5 billion, up 78.3 per cent from a year ago with 12.7 per cent market share. Materials captured 11.9 per cent market share and grew 155.2 per cent in value to $15.5 billion.

While most major markets saw a year-on-year decline in both proceeds and the number of IPOs, India was one of the few markets which saw an increase in IPO activity with proceeds growing 26.1 per cent and the number of IPOs rising 53.8 per cent from a year ago.

A total of $5.2 billion was raised through IPOs during the first half of this year. 

The IPO market was led by the listing of Life Insurance Corporation raising $2.7 billion in May, making it the largest-ever domestic IPO and the third-largest IPO globally so far this year.

The equity capital markets raised $9.1 billion in the first half of 2022, a 39.9 per cent decline and the lowest first half period since 2016, despite the mega LIC sale. However, the number of ECM offerings grew 11.1 per cent on-year.

Follow-on offerings, which accounted for 43.4 per cent of overall ECM proceeds, raised $3.9 billion, down 63 per cent from a year ago, while the number of follow-on offerings fell 13.8 per cent on-year.

ECM issuance from the financial sector accounted for a majority of the nation's ECM activity with 34.4 per cent market share with total proceeds worth USD 3.1 billion, down 56.3 per cent year-on-year.

Consumer staples saw a significant increase in proceeds and captured a 15 per cent market share, while healthcare followed with a 14.6 per cent market share, the report added.