ESG, technology theme that will dominate India Inc’s acquisitions in 2024

Top Indian companies are in talks for takeovers in the new year, especially in the renewable energy, electric vehicle and battery storage segments, as environmental, social and corporate governance and technology themes are expected to dominate corporate boardrooms by 2024, bankers say.

Vaibhav Gupta, partner at Dhruva Advisors, said top companies want to focus on renewable and clean energy businesses, and hence large investments are expected in increasing capabilities in these areas. “Technology as a sector must remain front and center with the rapid developments in Gen AI. A stable post-election political regime should help maintain global focus on India and keep merger and acquisition activity vibrant,” he said.

Top Indian companies such as the JSW Group are currently in talks with China’s SAIC Motor to set up a joint venture to manufacture electric vehicles in India. It is expected that some of the EV business will be spun off from MG Motor’s current Indian operations. Bankers say Adani Group is also looking to make acquisitions in the renewable energy sector as part of its $100 billion investment over the next decade. Reliance and the Tata Group are also looking for acquisitions in the renewable energy sector, bankers say.

Bankers and advisers said M&A activity will remain resilient in 2024 – supported by government reforms that promote foreign investment and domestic M&A activity. Key measures such as streamlined regulatory approvals, sector-specific incentives and proactive initiatives by the Securities and Exchange Board of India would encourage companies to write takeover cheques.

“This year anticipates an increase in control and take-private transactions, indicating a robust and dynamic M&A environment. These efforts underline India’s commitment to an enabling business environment that attracts both Indian and international business leaders,” said Rabindra Jhunjhunwala, partner at Khaitan & Co.

In 2023, India experienced subdued M&A activity due to global issues such as conflict, geopolitical tensions and US Federal Reserve volatility. “Indian companies are proceeding cautiously with M&A and fundraising, especially with the looming general elections in 2024. However, a recovery in M&A activity is expected, offering significant growth prospects for the Indian economy. Expectations for the upcoming Budget are set to boost M&A activity in the near future,” said Maneesh Bhandari, Founder & CEO, Growthpal, an M&A sourcing platform.

Last year, the software and infotech services space announced the maximum deals. Of these, according to Growthpal statistics, 80 percent of target companies were founded in the last fifteen years. After the software and infotech services, there was also a lot of activity in the manufacturing and consumer goods sectors and financial services. “While there was a decline in deal volume, deals in the previous year were also of larger size compared to deals in 2023, which is one of the reasons for the significant decline in deal value,” Bhandari said.

First print: January 17, 2024 | 7:46 PM IST