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Overview

In 2021, India's economy performed seemingly well despite global macroeconomic headwinds and supply chain shortages. As of 2022, India has overtaken the United Kingdom to become the fifth largest economy in the world.2 The pandemic resulted in a noticeable surge in digital adoption of technology. With a return to normalcy in the post-pandemic era, the uptick in technology seems to have normalised to some extent. Increased inflation and monetary tightening across the globe has also meant that the free-flowing approach of funding technology start-ups has seen some rationalisation.

However, the omnipresent nature of technology today and the burgeoning market for technology products has ensured that the momentum will continue. With 17 unicorns minted in the first half of 2022, the total number of Indian unicorns has crossed a century, with 103 unicorns that have a combined valuation of US$339 billion.3

Year in review

Deal volume and value continues to be robust. The overall deal value in 2021 increased 14.2 per cent from 2020 levels. In 2022, the figure has already crossed US$151 billion, marking an increase of 20 per cent from 2021 levels.4 Deal value in the technology sector hit US$51 billion in 2022, an increase of 21 per cent compared to 2020 levels, but a decrease of 13.5 per cent from 2021 levels.5

Larsen & Toubro announced the merger of two of its software firms – L&T Infotech and Mindtree – forming a combined entity worth approximately US$4 billion.6 Additionally, Reliance's retail unit acquired Addverb Technologies (a robotics company) for US$132 million, and Clovia (an e-commerce player) for US$125 million.7 Following the exit of Tiktok from the Indian market due to the tightening of regulatory policies concerning Chinese start-ups in India, the Indian short video company (Mohalla Tech), which operates the apps Sharechat and Moj, acquired another short video app company, MxTakatak, for US$700 million.

Some notable themes of dealmaking that emerged during the year include:

  1. consolidation among start-ups, with Zomato's acquisition of Blinkit, a grocery delivery platform, for US$569.28 million and Shiprocket's acquisition of e-commerce logistics provider Pickr for US$200 million;
  2. an increase in the average size of late-stage technology deals in 2021, relative to 2020;8 and
  3. while 2020 witnessed a slowdown in early-stage technology deals, funding for early-stage start-ups appears to be re-emerging.9

In forward-looking deal developments, the Competition Commission of India (CCI) recently approved payments service provider PayU's US$4.7 billion acquisition of online payments firm BillDesk.10