India – From strength to strength

The Indian M&A market has remained resilient in the face of the slowdown in the global M&A market for the last few years. India recorded a strong year in 2023 for deal activity, but the year-on-year increase in 2024 was lower than anticipated, with some sale processes taking longer to find buyers at the right valuation. Nonetheless, a number of sizeable deals were announced in 2024, including Reliance Industries' Viacom 18 merger with Disney controlled Star India, which created a media company valued at $8.5 billion, Bharti's acquisition of a stake in the UK's BT Group valued at c. $4 billion, JSW's $1.5 billion acquisition of O2 Power from EQT / Temasek, and Jubilant Group's $1.5 billion acquisition of Coca Cola's bottling business in India. 

Inbound M&A trailed in terms of deal volumes, but private capital continued to be a core source of acquisition activity – around 30% of deal value and around one in four deals had direct financial sponsor involvement, with acquirers like KKR and Brookfield remaining active in this space. As Japan outbound activity resurfaces globally, we are seeing Japanese investors showing renewed interest in India, with Sumitomo acquiring the rest of the share capital in Fullerton India for $700 million after initially purchasing a majority stake in 2021, and MUFG acquiring an undisclosed stake in DMI Finance, a corporate and consumer loan business, for $334 million.

Sectors

The traditional strongholds of Indian M&A continued to dominate in 2024, with substantial activity being recorded in the infrastructure, energy, healthcare, financial services, consumer, and technology sectors. Media and entertainment took the cake in 2024, but that was primarily as a result of the Reliance-Disney mega-deal, but various smaller deals were recorded in the other sectors.

In the healthcare sector, targets included pharma, clinics, medtech, and hospital operators. On cross border deals, Dr. Reddy's Laboratories acquired Haleon plc's global portfolio of nicotine replacement therapy brands for a total of c. $632.5 million.  Domestically, the most significant  deal of the year was Mankind Pharma's acquisition of Bharat Serums for $1.6 billion, which gave Mankind access to the women's health and fertility treatment market in India. This sector continues to be a top target for investors, as evidenced by the variety of investments made year on year.

Infrastructure and energy continued to be a hot sector for deal activity, with JSW's acquisition of O2 Power, TotalEnergies entering into a 50/50 solar portfolio JV with Adani Green Energy and Brookfield picking up an electric power producing company.

In the inbound space, a number of deals were signed in the manufacturing sector, including in particular in automotive in respect of electric vehicles. The interplay between the automotive and the new energy sectors is expected to give rise to more activity in 2025, as Indian companies attempt to strengthen their electric vehicle and battery production capabilities to compete with the global market.  Hybrid tech-consumer deals are on the rise, with Temasek acquiring a stake in Lenskart and ADIA leading a funding round for beauty e-commerce platform Purplle.

Legal trends

As a growing economy, the corporate law framework in India is constantly evolving to catch up to global standards in the M&A market. Fresh amendments to the Indian Competition Act mean that transactions with a value of over INR 2000 crores (c. $20 billion) will be subject to the review of the Competition Commission of India. This will lead to a larger number of transactions needing to cross an additional regulatory hurdle, which will need to be factored into the transaction timetable.

In a more welcome move, India has overhauled its cross-border share swaps regime and exchanging equity instruments of an Indian company for foreign equity instruments is now permitted.  The new regime has already facilitated multiple transactions, which is aimed at tapping into liquidity created by India's capital markets – a bright spot globally.

There appears to be an increase in appetite from banks to lend for acquisitions, and for sought-after assets, the market seems to be growing, in particular in the India-Singapore corridor. We are seeing an increased used of W&I insurance policies in the Indian market –  a product which has been very prevalent in the international markets in New York and London over many years, and is now seeing more traction in India. Earn-outs are another feature that are coming up more frequently as a tool to bridge gaps between parties.

We are also seeing increased ‘reverse flips’ or redomiciling, as the government is also amending the corporate law framework to encourage companies which have a holding company overseas to relocate to India by way of a ‘fast track merger’ of the foreign holding company and the Indian subsidiary.