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Sharp Decline: Mergers and Acquisitions (M&A) Value Plunges 75% to $32.6 Billion in First Half of 2023, Despite Record Deal Volume

Contrasting Trends: Record-Breaking M&A Deal Volume Fails to Offset Steep 75% Drop in Value, Reaching Only $32.6 Billion in First Half of 2023

The IPO market had a robust first half of 2023, experiencing its busiest period since 2018. The number of initial public offerings increased by 25% compared to the previous year, with 75 small-to-mid-sized companies going public. However, the total funds raised through these IPOs dropped significantly by 73% compared to last year.

On the other hand, the value of merger and acquisition (M&A) deals declined by 75% to USD 32.6 billion during the same period. Despite the drop in value, the number of M&A deals reached an all-time high of 1,400, marking the busiest semiannual period in terms of deal volume since records began in 1980. The lack of mega deals above USD 5 billion contributed to the decline in overall M&A value. Unlike the previous year when notable deals, such as the USD 40 billion merger of HDFC twins, took place, the first half of 2023 did not see any deals surpassing the USD 1 billion mark until the second quarter.

The M&A market saw a surge in mid-market transactions, which led to the increase in deal volume. The proposed merger of IDFC First Bank with IDFC is expected to boost M&A activity for the remainder of the year.

In terms of equity offerings, follow-on offerings witnessed a substantial growth of 127% compared to the previous year, raising USD 9 billion. This increase was driven by the share sale of four Adani group companies, amounting to USD 1.9 billion, as well as a record issuance of block deals.

Regarding M&A activities, domestic M&As reached USD 16.7 billion, experiencing a decline of 83.2% compared to the previous year. Inbound M&As fell by 46.3% to USD 12 billion, while outbound M&As slipped by 38.5% to USD 3.7 billion. The United States was the most targeted nation, capturing 30.8% of the total M&A value.

The financial sector dominated the M&A market in terms of the number of deals, totaling USD 7.5 billion, but experienced a significant decline of 88.9% in value. The industrials sector accounted for USD 5.2 billion, down by 11.6% compared to the previous year. The high technology sector witnessed the highest number of deals in the first half, with a market share of 15.5% and a total value of USD 5 billion, but still down by 73.1% compared to the previous year.

Private equity-backed M&As reached USD 8.2 billion, experiencing a decline of 56.1% and marking the lowest first-half period by value since 2020.

In the equity capital markets, proceeds amounted to USD 10.3 billion, an increase of 13.5%, marking the highest first half period since 2021. The number of offerings reached a five-year high, with 143 equity and equity-linked issuances, up by 31.2% compared to the previous year. From the IPO space, companies raised USD 1.4 billion, a decline of 73.4% in proceeds, but the volume of IPOs increased by 25%. Follow-on offerings accounted for 87% of the overall equity capital market proceeds, raising USD 9 billion, an increase of 127.2% in value and 38.8% in volume.

The industrials sector dominated the equity capital market activity, capturing a market share of 23.9% with proceeds worth USD 2.5 billion. This was a significant increase compared to USD 696.1 million in the same period of the previous year.

Also read this article: IndusInd Bank Stock Surges Over 3%, Reaches Highest Level in 52 Weeks Following Encouraging Q1 Business Update

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