M&A value nosedives 75% to $32.6 bn in H1 of 2023 despite record volume

The value of merger and acquisition (M&A) deals plunged 75 per cent to USD 32.6 billion in the first half of 2023 even as the number of such deals crossed an all-time high of 1,400, according to industry data.

More than 1,400 transactions in the first half, up 5.2 per cent on-year, made the first half of 2023 busiest semiannual period in terms of number of deals since records began in 1980.

But the overall value of M&As fell 75 per cent to USD 32.6 billion during the period due to the lack of mega deals above USD 5 billion, unlike last year when the HDFC twins announced the USD 40 billion record-breaking deal last April, according to financial markets data provider Refinitiv, a part of the London Stock Exchange Group.

The volume rose because the market saw a healthier level of mid-market transactions dominating the deal street.

No deals bigger than USD 1 billion was announced during the first quarter of 2023, but there were four deals within the USD 1-billion range announced in the second quarter. The proposed merger of IDFC First Bank with IDFC will prop up the M&A activity for the rest of the year, the report said.

In the equity space, the IPO market saw the busiest first half since 2018 as the number of initial public offerings grew 25 per cent on-year to 75 small-to-mid-sized listings, raising USD1.4 billion. But in terms of money raised, this was a steep 73 per cent lower than last year's.

Follow-on offerings increased 127 per cent on-year, raising USD 9 billion, driven by the share sale of four Adani group companies, which totalled USD 1.9 billion, as well as record issuance of block deals, the report said.

Among others, domestic M&As totalled USD 16.7 billion, down 83.2 per cent on-year. Inbound M&As fell 46.3 per cent to USD 12 billion and outbound M&As slipped 38.5 per cent to USD 3.7 billion with the US as the most targeted nation grabbing 30.8 per cent of the total pie.

Majority of the deals involved the financial sector, which totalled USD 7.5 billion, but down 88.9 per cent in value, and accounted for 23.1 per cent market share. Industrials totalled USD 5.2 billion, down 11.6 per cent and 16 per cent market share.

High technology, which saw the greatest number of deals in H1, captured 15.5 per cent market share with USD 5 billion, but still down 73.1 per cent on-year.

Private equity-backed M&As amounted to USD 8.2 billion, down 56.1 per cent making it the lowest first-half period by value since 2020.

Equity capital markets raised USD 10.3 billion, up 13.5 per cent, making it the highest first half period by proceeds since 2021. Number of offerings hit a five-year high and saw 143 equity and equity-linked issuances, up 31.2 per cent on-year.

From the IPO space, the companies raised USD 1.4 billion, down 73.4 per cent by proceeds, but number of IPOs saw a 25 per cent jump in terms of volume. Follow-on offerings accounted for 87 per cent of overall ECM proceeds, raising USD 9 billion, up 127.2 per cent in value and 38.8 per cent in volume.

The industrials sector accounted for majority of the ECM activity with 23.9 per cent market share worth USD 2.5 billion, significantly up from USD 696.1 million in the year-ago period, followed by financials that captured 21.8 per cent market share and then materials and retail with 13.2 per cent and 11.5 per cent share, respectively.

Primary bond issuances saw a 66 per cent jump to USD 51.4 billion during the first half, making it the highest semiannual period since records began in 1980.

Again the financial sector led the market capturing 81.3 per cent market share or USD 41.8 billion, which was up 136.2 per cent in proceeds. Industrials followed with a 7 per cent market share worth USD 3.6 billion, which was 103 per cent more than the same period a year ago.