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The Indian auto sector recorded a remarkable $1.9 billion across 32 deals in the third quarter of 2023, marking the highest level of quarterly deal activity since the fourth quarter of 2021, according to a report by Grant Thornton Bharat. This surge in deals highlights a significant recovery for the sector, driven by strong investments in technology, mergers and acquisitions (M&A), and an increased focus on global partnerships.
The growth was largely propelled by three high-value deals totaling $300 million, a sharp increase compared to the previous quarter, which saw only one $100 million deal. The most notable investment was WestBridge Capital’s $200 million infusion into Rapido, a clear sign of the growing investor confidence in the sector.
Mergers and acquisitions in the auto sector saw a considerable boost, with six deals worth $74 million in Q3, representing a 20% rise in deal volumes and a 30% increase in value compared to Q2. This uptick reflects the sector’s ability to recover from the global pandemic and signals an increasing focus on international collaborations. Notably, outbound M&A activity grew, with two key deals centered on auto components and electric vehicle (EV) infrastructure, indicating a shift towards technological innovation and global expansion.
Increased Focus on Auto-Tech and Components
The report also pointed to a growing investor interest in auto-tech and auto-component subsectors. This shift towards technological advancement, particularly in EVs and automation, resulted in a 30% increase in deal values compared to the previous quarter. The industry’s recovery, following a 67% decline in Q2, underscores its resilience and adaptability to shifting market demands.
The report further highlighted the growing concentration of high-value deals. The top two investments in the quarter accounted for 55% of total private equity (PE) deal value, reflecting increased investor confidence in the auto sector’s long-term potential. The average deal size also jumped to $25 million, up from $18 million in the second quarter, showcasing the rising interest in larger, more strategic investments.
The Indian auto sector’s record deal activity in Q3 reflects its growing attractiveness as an investment destination. With a strong focus on innovation, global partnerships, and long-term growth, the industry is poised for sustained expansion. As the sector continues to embrace technological advancements and alternative fuel solutions, its role in the global automotive landscape is set to grow even further.
The resurgence of the Indian auto industry, despite pandemic challenges, highlights its potential for value creation and its pivotal position in the broader economic recovery.
