During the March quarter, India’s consumer and retail sector experienced a significant uptick in mergers and acquisitions as well as private equity deals. Deal value increased by nearly 30%, while volume rose by 20% compared to the previous year. According to a report by Grant Thornton Bharat, the segment witnessed 102 deals amounting to $1.74 billion in the first quarter of 2024, up from 85 deals totaling $1.28 billion in the corresponding period last year.
In the consumer sector, there were 88 private equity deals, marking the highest volume in five quarters. However, M&A activity in the consumer industry experienced a decline, with the number of deals dropping to 14 from 17 compared to the previous year. Despite this, the value surged to $925 million from $79 million in 2023.
Naveen Malpani, partner and consumer industry leader at Grant Thornton Bharat, suggested that the slowdown in M&A activity could be attributed to the upcoming elections prompting businesses to exercise caution, along with sluggish consumer spending leading to restrained revenue growth. Nevertheless, there was a significant increase in deal value, primarily fueled by Tata Consumer Goods‘ acquisitions of Capital Foods and Organic India, valued at $615 million and $229 million respectively. These two transactions collectively accounted for a 91% share in M&A values, totaling $843 million.
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Private equity activity reached its highest quarterly volume since Q3 2022, with 88 deals totaling $823 million. While this represented a 30% increase in volume, the deal value saw a 32% decline. This decrease in deal value can be attributed to a higher number of small-ticket transactions during the quarter under review.
In fact, approximately half of the volume of private equity deals was attributed to transactions valued at less than $7 million. Additionally, there was a significant contribution to deal activity from late-stage companies raising Series B rounds or above.
The top five deals in the sector represented 59% of the total value, amounting to $1.03 billion, yet they comprised only 5% of the total volume. Notably, four out of these five deals were in the food processing segment.
Malpani added that established players are driven by the expanding healthy food market in India, projected to hit $30 billion by 2026. They are actively pursuing acquisitions of niche brands that cater to specific dietary requirements or follow premiumization trends.
In the realm of e-commerce, the most substantial transaction was spearheaded by a consortium of investors, including Jungle Ventures, Sidbi Venture, Anicut Capital, Sharrp Ventures, and angel investors. They invested $27 million in a late-stage Series C round for The Ayurveda Experience.
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