Private Equity and Venture Capital deal activity are expected to focus on the emerging areas of artificial intelligence and machine learning(AI/ML), Software as a service(SaaS), and digital customer engagement, according to Grant Thornton Bharat’s Tech Tracker report.
Technology deals are expected to continue strong in areas like cloud, cyber security, AI, digital consulting, etc. These are expected to be areas of strong focus for larger and mid-size tech service players, said the report. It analyses and presumes moderation in valuations going forward, driven by the global tech valuation downside trends in coming quarters.
Raja Lahiri, Partner, Growth and TMT Leader, Grant Thornton Bharat said, “There will be some moderation in the funding environment for start-ups, especially in the consumer internet space, with an enhanced focus of these players and investors on profitability and reducing cash burns. As India continues to grow its SaaS player base, we also expect more deal-making in this segment to build Indian SaaS companies on a global scale.”
Tech deals continue to be active and makeup 30 per cent of total deal values (M&A and PE) in the first 9 months of 2022. The sector is poised for growth in the coming quarters, especially around tech services, buy-out funds, and new-age tech companies, he added.
The report noted that during the first nine months of 2022, tech M&A space clocked 216 deals worth USD 20.9 billion, compared to 156 deals worth $9.8 billion in the first nine months of 2021. This increase was largely driven by the L&T Infotech-Mindtree merger.
On private equity and venture capital deals, during the first nine months of 2022, the tech landscape witnessed 974 deals worth $12.9 billion, compared to 850 deals worth $ 20.7 billion during the same time last year. There has been slow deal activity from Q3 2022 (299 deals compared to 383 deals in Q3 2021), it further said.
