India saw 161 deals worth over $13 billion in April, out of which 30 accounted for an aggregate value of $5 billion, says a report by consultancy firm Grant Thornton.
Analysts attributed the spike in deal activity to the emergence of the digital theme. “There has been strong underlying fundamentals on the demand side. Due to the pandemic, digital adoption among Indian consumers has zoomed, hugely benefiting the Internet economy,” said Devendra Agrawal, Founder & CEO, Dexter Capital Advisors.
Anup Jain, Managing Partner, Orios Venture Partners attributed the recent rise in deal activity to a strong rebound in consumption after the first wave, as India’s digital adoption story hit the inflection point and the robust liquidity available flowed to the high growth and emerging markets like India.
The benchmark equity indices have not yet shown the major scars of the second wave, highlighting the dichotomy between the markets and the real economy. “The current level of economic activities does not seem to have suffered significantly from the localised lockdowns yet,” Grant Thornton partner Prashant Mehra said.
The number of deals more than doubled in April from the year-ago period, which had been marred by a nationwide lockdown.
While deal volumes doubled compared with last year’s, deal values fell 30 per cent, because of last year’s $5.7 billion Facebook deal with Jio. If that deal is excluded, April 2021 has recorded a 2.5 times year-on-year increase in deal values.
“Calendar 2020 was a year of digital acceleration. There are genuine business opportunities in the COVID impacted world and digital-first businesses have been the biggest beneficiaries,” said Agrawal of Dexter Capital.
In terms of PE activity, April 2021 saw record deal both in terms of deal value and volume with 119 investments accounting for $7.6 billion, the highest in any month since 2011. The month saw five startup and e-commerce companies joining the Unicorn Club, making it a historic month for the Indian startup ecosystem.
“There is a buzz in the technology space and opportunities for capital deployment in India. An asset repricing has taken place over the past few years thanks to continued low cost of capital, low inflation and a movement towards equities and private markets from pockets, where wealth was concentrated,” said Jain of Orios.
