MONEYCONTROL PRO PANORAMA | WILL M&AS BE THE FLAVOUR OF 2024?

Dear Reader,

Corporate confidence is on the upswing. Mega mergers and acquisitions (M&As) have hogged media headlines globally in the March quarter of 2024 (Q1 CY24).

In the past two years, frenzied activity was witnessed in the private equity and venture capital deals and in the initial public offering (IPO) markets. But there was a slump in M&A activity across the world and across industries, with deals ticked plunging to a decadal low.

The rebound comes as a pleasant surprise, with the global M&A value in Q1CY24 rising 30 per cent year-on-year (yoy) to $690 billion. According to data from the London Stock Exchange quoted in this FT article, the number of blockbuster deals worth at least $10 billion saw a marked increase to 11 in Q1 CY24 from 5 in Q1 CY23.

The sudden turnaround in sentiment comes because of several factors -- financial liquidity, a vibrant capital market, healthy corporate balance sheets and, more importantly, hope that the cost of money is on its way down as interest rates ease. Investment bankers point to a higher degree of engagement in recent months, among companies, investors and financial institutions.

Interestingly, the trend is seen across developed countries, with Europe taking the lead as deals rose 60 per cent year on year followed by the US where deals hit a three-decade high.

Asia-Pacific data reportedly showed a decline. Perhaps, China was a dampener.

But in India, which has been the front-runner in global growth, the M&A landscape has certainly seen improvement. Data from Venture Intelligence shows that $15 billion worth of M&A deals came through in Q1CY24, up from $9.2 billion a year ago and nearly double $7.9 billion recorded in the December quarter.

Will the trend be sustained? So far, in India, as is the case in the rest of the world, the jump in value of M&A deals is the result of just a handful of blockbuster sign-ups between mega corporates. For instance, the $8.5 billion Reliance-Disney deal and the $2 billion buyout of ATC India's telecom tower assets by private equity Brookfield. Most other deals were much smaller.

However, after lacklustre activity for nearly a decade, a decline in interest rates and vibrant capital markets may fuel more such M&A deals in 2024.

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