India's consumer and retail sector experienced a notable surge in mergers and acquisitions (M&A) and private equity deal activity during the March quarter of 2024, showcasing robust growth in both volume and value compared to the previous year. According to a report exclusively shared with ET by Grant Thornton Bharat, the segment witnessed significant traction, with 102 deals amounting to $1.74 billion, marking a nearly one-third increase in value and a fifth increase in volume compared to the same period last year.
The consumer space particularly stood out, recording its highest volume of PE deals in five quarters, totaling 88 transactions. However, M&A activity in the consumer industry experienced a slight dip in volume, with 14 deals compared to 17 the previous year, despite a substantial surge in value, which soared to $925 million from $79 million in 2023.
Commenting on these trends, Naveen Malpani, Partner and Consumer Industry Leader at Grant Thornton Bharat attributed the surge in deal value to significant acquisitions such as Tata Consumer Goods' acquisition of Capital Foods valued at $615 million and Organic India valued at $229 million. These acquisitions collectively contributed to a staggering 91% share in M&A values, totaling $843 million.
PE activity in the sector also witnessed a notable uptick, recording the highest quarterly volume since Q3 2022, with 88 deals valued at $823 million. Despite a 32% decline in deal value, the volume saw a robust 30% increase, primarily driven by a surge in small-ticket transactions during the quarter.
Small-value deals, amounting to less than $7 million, accounted for approximately half of the PE deal volume, indicating a growing interest in early-stage investments. Additionally, late-stage companies raising Series B rounds or above played a significant role in driving deal activity.
The top five deals in the sector collectively accounted for 59% of the total deal value at $1.03 billion, despite constituting only 5% of the volume. Notably, four of these deals belonged to the food processing segment, reflecting a growing interest among established players in acquiring niche brands catering to specific dietary needs or premiumization trends, driven by the projected growth of the healthy food market in India, expected to reach $30 billion by 2026.
In the e-commerce segment, the largest deal involved a consortium of investors, including Jungle Ventures, Sidbi Venture, Anicut Capital, Sharrp Ventures, and angel investors, participating in a late-stage Series C round for The Ayurveda Experience, amounting to $27 million.
The surge in M&A and PE activity underscores the resilience and dynamism of India's consumer and retail sector, despite challenges posed by the impending elections and sluggish consumer spending. As businesses adopt a cautious yet strategic approach, fueled by evolving market trends and investment opportunities, the sector is poised for further growth and innovation in the coming quarters.
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