India’s Noteworthy Mergers & Acquisitions Deals of FY24

India’s Robust M&A Landscape

While developed economies face stagnation, India’s economic growth forecast for FY24 remains robust at 6% to 7%, exceeding the 2% or less projected for many developed markets. This positive outlook is reflected in the Indian M&A market. Following a record-breaking year in 2022, deal activity witnessed a slight slowdown in FY24. However, M&A volume remained healthy, exceeding levels observed in any of the past ten years barring the exceptional year of 2022.

A noteworthy trend in FY24’s M&A activity is the increasing focus on sectors with promising long-term growth prospects. Sectors like renewable energy, infrastructure, logistics, and manufacturing, all backed by favourable government policies, witnessed a significant rise in deal share. These sectors collectively accounted for one-third of all M&A deals over the past 18 months. Additionally, the healthcare sector displayed continued strength, with deal volumes steadily rising over the past five years. This trend can be attributed to a combination of factors, including the availability of high-quality assets entering the market and a generally positive outlook for the sector.

Top 3 M&A Deals of FY24

1. Brookfield Asset Management acquires Rostrum Realty
   In May 2023, Brookfield Asset Management, a leading global alternative asset manager, announced the acquisition of a 51% controlling stake in Rostrum Realty Pvt Ltd based on an enterprise valuation of Rs 5,000 crore. Rostrum Realty, a real estate joint venture between Brookfield and Sunil Mittal’s Bharti Enterprises, owns and develops commercial properties in key Indian cities like Delhi, Gurugram, and Ludhiana. This strategic move strengthens Brookfield’s presence in the Indian real estate market, allowing them to leverage their expertise in managing prominent properties like Worldmark Aerocity in Delhi and Airtel Centre in Gurugram.
2. IDFC First Bank merges with IDFC Ltd.
   In July 2023, the boards of IDFC First Bank and IDFC Ltd., two prominent financial institutions, approved a merger proposal. The share exchange ratio for the merger was set at 155 equity shares of Rs 10 face value issued by IDFC First Bank for every 100 shares of IDFC Ltd. This merger follows the HDFC Bank-HDFC Ltd. merger that concluded earlier in the year for a staggering USD 40 billion. The IDFC First Bank-IDFC Ltd. merger is expected to streamline operations, simplify corporate structures, and enhance regulatory compliance for the merged entity. Additionally, the merger is expected to result in a 4.9% increase in the per-share value of the bank.
3. Kotak Mahindra Bank acquires Sonata Finance
   In October 2023, Kotak Mahindra Bank, a leading private sector bank in India, received approval from the Reserve Bank of India (RBI) to acquire Sonata Finance for Rs 537 crore. This acquisition marks a significant move for Kotak Mahindra in the non-banking financial sector (NBFC) space. Sonata Finance, a microfinance provider, offers small loans to underserved segments like low-income individuals and small businesses, often in rural and semi-urban areas. By acquiring Sonata Finance, Kotak Mahindra strengthens its position in financial inclusion and gains a platform to efficiently cater to these previously underserved demographics.

Conclusion

The top M&A deals of FY24 showcase India’s vibrant corporate landscape and its focus on long-term growth. These strategic acquisitions not only reflect investor confidence in the Indian economy but also highlight key growth sectors like renewable energy, infrastructure, and financial inclusion. As India continues on its growth trajectory, M&A activity is expected to remain robust, creating exciting opportunities for investors and companies alike.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.