India Inc Deal Activity Plunges 48% in Q2 2025 Amid Global Uncertainty: Grant Thornton Bharat

Thursday, July 10: India Inc. experienced a substantial decline in deal activity during the second quarter of 2025 (Q2 2025), with the total transaction value plummeting by 48% sequentially to $17 billion. This downturn, highlighted in a report by Grant Thornton Bharat, underscores the impact of heightened global uncertainties on investor sentiment across key markets.

Deal Volume Holds Steady, But Value Crashes

Despite the sharp drop in value, the number of deals remained relatively robust, with 582 transactions recorded in Q2 2025, including IPOs and Qualified Institutional Placements (QIPs). Excluding public market activity, the count stood at 554 deals worth $12.8 billion.

While this represents a 23% year-on-year increase in deal volume compared to Q2 2024, it also signifies a 13% drop in the number of deals and a dramatic fall in value from Q1 2025. Factors cited for this investor caution include the ongoing Iran-Israel conflict, the Russia-Ukraine war, policy uncertainty in the US, and surging gold prices.

M&A Activity Hits Multi-Year Lows

Mergers and acquisitions (M&A) bore the brunt of the slowdown, recording only 197 deals valued at $5.4 billion, marking the lowest quarterly M&A value since Q2 2023. Domestic deal values alone slumped by 81% sequentially, largely due to the absence of high-value transactions. The sole billion-dollar M&A in the quarter was Sumitomo Mitsui Banking Corporation’s $1.57 billion investment in YES Bank, aiming to acquire a 20% stake.

Cross-border activity also weakened, with outbound M&A falling by 25% in volume and 74% in value. Inbound deals, however, showed resilience, particularly in the banking sector, which accounted for nearly half of the total M&A value. Notably, Zaggle Prepaid Ocean Services pursued an aggressive consolidation spree, acquiring companies like Dice and GreenEdge Enterprises to enhance its presence in IT, loyalty, rewards, and travel segments, among other strategic takeovers.

Private Equity Holds Ground

Private equity (PE) activity remained relatively stable in comparison, clocking 357 deals worth $7.4 billion – the second-highest volume since Q4 2022. Nevertheless, the value of PE deals declined, impacted by fewer large-ticket transactions. The number of deals exceeding $100 million dropped to 18 (worth $4.6 billion) from 21 deals (worth $6.1 billion) in the previous quarter. The largest PE investment was an $862 million infusion into IDFC FIRST Bank by Warburg Pincus and the Abu Dhabi Investment Authority (ADIA). This investment of approximately ₹7,500 crore from Warburg Pincus affiliate Currant Sea Investments B.V. and ADIA’s wholly-owned subsidiary Platinum Invictus B 2025 RSC Limited aims to fuel the bank’s next phase of growth.

IPO and QIP Markets Show Mixed Signals

The IPO segment continued its sluggish streak for a third straight quarter, with 12 public issues raising $1.9 billion – a 25% drop in volume and 26% decline in value from Q1. However, June offered some green shoots, with successful listings from Leela Hotels ($407 million), Ather Energy ($343 million), and Aegis Vopak Terminals ($326 million), indicating a late-quarter revival in public markets.

QIPs maintained stability with 16 issuances raising $2.2 billion, closely aligning with the previous quarter. Six banks alone raised $1.1 billion through QIPs, underscoring strong institutional appetite for financial sector offerings.

Sectoral Trends in Q2 2025

• Retail & Consumer: Led in volume, contributing 21% of total deals, but suffered a 78% decline in value due to smaller ticket sizes.
• Banking & Financial Services: Emerged as the leader in deal value at $4.5 billion from 73 deals, including six high-value transactions.
• Infrastructure: Secured the second spot in deal value with $1.2 billion, thanks to large PE inflows in road and urban development projects.
• IT & ITeS: Logged 58 deals, but volume and value dipped 35% and 57% respectively from the previous quarter.
• Manufacturing: Recorded its highest-ever deal volume, though value fell 24% quarter-on-quarter.

Future Outlook

While Q2 2025 was characterised by caution and contraction, experts at Grant Thornton Bharat remain optimistic about a rebound in the second half of 2025. India’s strong macroeconomic fundamentals, growth in high-potential sectors, the emergence of new unicorns, and early signs of revival in public markets are expected to reignite deal momentum in the coming months.

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