Deals Plunge By 60% To $1.8 Billion In February On Deepening Funding Winter

The deepening funding winter that the startups face and the near dry-up of IPOs singed the deal street as the total value of deals plunged by 60 per cent to USD 1.8 billion in February, shows an analysis.

According to Grant Thornton, the industry saw just 89 deals worth USD 1.8 billion in February, which is 60 per cent lower than the year ago period in value terms and down by 54 per cent year-on-year in volume as investors continued to tread cautiously amid macroeconomic uncertainties.

This is the second-lowest deal volume and the lowest value since 2014.

Of the total deals, M&As saw significant downtrend both in terms of volume which fell 48 per cent to 24 deals, and by 47 per cent in value clocking at USD 755 million compared to February 2022.

The IPO segment was the worst with just one issue of USD 8 million, compared to three issues raising USD 1 billion a year ago.

While M&As were dominated by cross-border deals, particularly outbound transactions on the back of one big-ticket transaction of USD 578 million, volume continued to be dominated by domestic consolidations accounting for 67 per cent of transactions.

The pharma, healthcare and biotech, and IT and ITeS sectors led the deal activities with 17 per cent and 13 per cent of the volume, respectively, followed by the automotive sector thanks to the Autosystemtechnik's acquisition by Motherson International for USD 578 million.

This transaction alone was responsible for 77 per cent of total M&A value, making it the fifth-largest deal in this sector in the past 12 years.

Private equity investments continued to fall both in terms of value as well as volume, recording only 65 deals worth USD 1 billion, making the reporting month with the lowest monthly deal volume and values since August 2020.

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