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Investor caution leads to further slowing in activity within the BFSI sector.



Deals activity slows further in BFSI sector as investors turn cautious

Deals activity in the banking, financial services, and insurance sector has slowed significantly in the March quarter of 2024, with both the value and volume of deals decreasing. According to a report by Grant Thornton, a total of 52 deals were recorded in the first quarter of 2024, with a total value of $1.7 billion. This represents a 7 per cent decrease in volume and a 14 per cent decrease in value compared to the previous quarter.

Mergers and acquisitions (M&A) deals saw a significant decline, with 13 deals amounting to $973 million, down 28 per cent sequentially. Private equity investments, on the other hand, showed a marginal increase, with a 3 per cent rise in volume and an 18 per cent increase in value, totaling $681 million. The boost in value was mainly driven by Sumitomo Mitsui Financial Inc’s acquisition of a 25 per cent stake in SMFG India Credit Company for $700 million.

Regulatory changes, such as the liberalization of insurance regulations and relaxation of FDI norms, along with RBI regulations for NBFCs, are expected to impact deal activity in the financial services sector. Fintech companies accounted for the most deals, although the values were lower compared to banks and NBFCs.

Big deals in the sector included Mizuho Bank acquiring a minority 15 per cent stake in Kisetsu Saison Finance for $145 million and Advent International and Multiples PE investing $233 million in Svantantra Microfin. Despite the slowdown, investors remain interested in India as an investment destination, focusing more on value and sustainability in their investments in the sector.

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