We are pleased to present the Nexdigm (SKP) Investment Chronicle – our periodic update that focuses on the deal-making landscape in India, comprising Mergers and Acquisitions (M&As), equity investments, and exits. In this report, we look at India's transaction arena during January to June 2021.

Amidst the hardships of the second wave of COVID-19 and looming concerns around a third wave, deal-making in the first half of 2021 has shown resilience with USD 47.35 billion from 1,207 deals. H1 2021 has witnessed a growth in value terms of 13% vis-à-vis H1 2020. In Q1 2021, 52% of the deal value was contributed by M&A, however, the weightage shifted to Equity Investments contributing 46% in Q2 2021.

After the dip in the first half of 2020, the improving deal volumes were primarily driven by consistent growth in Equity Investments. A total of 781 Equity Investments were witnessed in H1 2021 vis-à-vis 569 deals in H1 2020 and 669 deals in H2 2020. Despite anticipated challenges, PE/VC firms have maintained enthusiasm in Indian markets owing to confidence in the recovery and long-term potential of the Indian market, lucrative opportunities in the start-up space, and promising entrepreneurial talent.

Investors continued to allocate capital and tap into deal opportunities in the recovering landscape as the Indian economy demonstrated adaptability and agility. Ongoing vaccination drives, recovery of several COVID-19 affected sectors, upscaling technology, and digitization of work areas reinforced anticipations of a strong recovery. The upside in market sentiment and investor confidence can be gauged from the fact that the IPOs of several small companies were largely oversubscribed.

Government initiatives for boosting the manufacturing segment in the form of Production Linked Incentive (PLI) schemes and relaxations in tax norms are aimed at upholding investor confidence through challenging times. Backed by a clear focus on strengthening the domestic supply chain and export capabilities combined with interest of global companies in decentralization of operations, the recovery of the deal landscape is expected to continue in the coming months.


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