We are pleased to present the Investment Chronicle by Nexdigm (SKP) – our quarterly update that focuses on the deal-making landscape in India, comprising Mergers and Acquisitions (M&A), equity investments and exits. In this report, we look at the Indian transaction arena in the third quarter of 2019.

In line with anticipations around investor behaviour, owing to political uncertainties in the first half of the year, 2019 initiated cautiously with deals worth USD 16.6 billion in the first quarter. The following two quarters followed steadily at USD 18.1 billion and USD 19.2 billion. At a further dissection of the landscape, after a phenomenal record in 2018, M&A has continued on a declining trend with deals worth only USD 8.8 billion this quarter and just two deals crossing the USD 1 billion mark.

While factors such as policy interventions and trade wars have brought upon a prudence in investors globally, investments in India have continued to stay strong. In contrast to M&A's dismal performance this quarter, Equity Investments at USD 9.9 billion have kept momentum with their performance in the previous years, reflecting investor confidence in the economy despite short term obscurities.

As volatile capital markets and unyielding valuations forced investors to revisit their exit strategies, Private equity exits plummeted the most in 2019 with a marginal share in the deal landscape, collating as low as USD 393 million.

Despite the setback in the deal momentum in the last three quarters, investor sentiments remain positive as India continues to offer a progressive market to be catered to in the long term. Temporary halt in M&A activities is expected to recede over the coming quarters as the government takes measures to reinforce investor confidence after the uncertain environment in the first half of the year. Along with gradual fruits of implementation of major policy reforms such as Goods and Service Tax, Insolvency and Bankruptcy Code and relaxations in foreign investment regulations, recent reduction in corporate tax and custom duty rates continue to make the Indian market more lucrative.

While the effects of transaction deceleration this year may partially spill into the last quarter of 2019, 2020 is expected to gain traction again, with a continuing flow of investors motivated by the vast potential of the Indian market, and growing clarity on a stabilising political and regulatory environment.

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