TECHNOLOGY SECTOR M&A: KEY MARKET TRENDS IN 2022 AND OUTLOOK FOR 2023

India saw a record-breaking year for deal-making in 2021, following the global trend. The Technology, Media, and Telecommunications (TMT) sector had the highest activity. Nevertheless, the Russia-Ukraine crisis, rising inflation, supply chain restrictions, the ongoing effects of COVID-19, and other geopolitical and financial problems led to a stable rise in merger and acquisition (M&A) activity in India in 2022 despite a global slump.

- SUJATA SANGWAN

M&A LANDSCAPE 

The annual deal tracker report from Grant Thornton Bharat claimed that 2022 set a new record for M&A activity, with a 200% rise in deal values over 2021. With 44% of all deal volumes, the startup and IT sectors dominated the market, while the banking and manufacturing sectors lead in terms of value. The merger of Larsen & Toubro Infotech and Mindtree, both subsidiaries of Larsen & Toubro, which was completed in November 2022 and generated combined revenues of nearly USD 1.05 billion in the third quarter of the fiscal year 2022–2023, was the focus of consolidative M&A in the technology sector in 2022.

In the startup market, consolidative strategies have also grown quite popular, and the majority of well-funded, rapidly growing startups are growing through a succession of startup acquisitions. For instance, Byju’s invested over USD 2.6 billion between the fiscal years 2021-2022 and 2022-2023 to buy a number of Indian and overseas companies in the edtech sector. These include the USD 1 billion acquisition of Indian test preparation provider Aakash Educational Services in August 2022. In addition, Byju’s announced the merger of four of its acquired companies that cater to the K10 customer segment.

Zomato, a food delivery platform, purchased Blinkit (formerly Grofers) for about USD 570 million in order to enter the fast grocery delivery space and compete with Swiggy’s Instamart. To bolster its expansion plans even more, Zomato has also acquired the Blinkit subsidiary that provided warehousing and associated services.