- The Indian auto sector recorded 32 deals worth $1.9 billion in Q3, marking the highest quarterly activity since Q4 2021.
- Mergers and acquisitions activity surged, with six deals worth $74 million, indicating the sector's robustness and focus on global partnerships.
- The sector saw a shift towards auto-tech and auto-component subsectors, with deal values increasing by 30%.
- High-value deals, led by WestBridge Capital's $200 million investment in Rapido, reflect growing investor confidence in the sector.
The Indian auto sector has demonstrated remarkable resilience and attractiveness to investors, as evidenced by the robust deal activity in both volumes and values in the July-September period. According to a report by Grant Thornton Bharat, the sector saw 32 deals worth a staggering $1.9 billion, marking the highest quarterly activity since Q4 2021.
The growth was driven by three high-value deals valued at $300 million, a significant increase compared to one $100 million deal in Q2. This resurgence in the auto sector is a testament to its revival, driven by strategic investments in technological innovation, global expansion, and long-term value creation.
Robust M&A Activity and Global Partnerships
The mergers and acquisitions (M&A) activity also saw a surge, with six deals worth $74 million, representing a 20 per cent increase in volumes and 30 per cent growth in values from Q2. This increase in M&A activity is indicative of the sector's robustness and its ability to bounce back from the challenges posed by the global pandemic.
The report further highlighted that outbound M&A activity increased, with two deals showcasing the industry's focus on global partnerships, particularly in auto components and EV infrastructure. This is a clear indication of the sector's strategic shift towards technological innovation and global expansion.
Shift in Investor Interest and Significant Growth
The September quarter also witnessed a shift towards auto-tech and auto-component subsectors, indicating growing interest in strategic M&A. This shift is reflective of the industry's focus on innovation and the growing importance of technology in the auto sector.
Compared to the first half last year, Q3 saw significant growth, rebounding from a 67 per cent decline in Q2, with deal values increasing by 30 per cent. This rebound is a testament to the sector's resilience and its ability to adapt to changing market conditions.
High-Value Deals and Growing Investor Confidence
The top two investments accounted for 55 per cent of PE values, reflecting the concentration of high-value deals. This was led by WestBridge Capital's $200 million investment in Roppen Transportation Services Pvt Ltd (Rapido), a clear indication of the growing investor confidence in the sector.
The average ticket size for deals also saw a significant increase, rising to $25 million, up from $11 million in Q1 and $18 million in Q2. This increase is indicative of the growing investor confidence in the sector and its potential for growth and value creation.
