INDIA Law and Practice Contributed by: Raj Ramachandran and Krutamana Pisipati, JSA
1. Market Trends 1.1 Technology M&A Market
• amendments to the Companies (Compro- mises, Arrangements, and Amalgamations) Rules, 2016 pursuant to which companies are permitted to proceed with a cross-border merger once approval from the Reserve Bank of India (the “RBI”) is obtained, instead of approaching the National Company Law Tribunal, thereby expediting the merger pro- cess and allowing parties to more definitively estimate the timeframes involved in consum- mating or closing the transaction. 1.2 Key Trends One of the key trends in technology M&A trans- actions in India in the last 12 months has been inbound M&As increasing by 32.4% year-on- year. Another trend has been an increase in equity financing relating to tech companies in the first half of 2024. It has also been reported that there has been a significant increase in equity financing and companies raising USD29.5 billion in proceeds, which is almost twice the amount raised in the previous year during the same time period. Fol- low-on offerings also reportedly grew by 156% year-on-year, and block trades saw a 117% increase. IPO activity similarly grew positively by 98% from the first half of 2023. 2. Establishing a New Company, Early-Stage Financing and Venture Capital Financing of a New Technology Company 2.1 Establishing a New Company Start-up companies previously considered establishing their companies or domiciling in foreign jurisdictions for ease of access to capi- tal and investments, clientele and business and capital markets. However, there has recently
The first three quarters of 2024 have seen a steady increase in deal values reversing the slowdown of technology M&A transactions in 2023. Although the number of technology M&A deals in 2024 has been on the lower side rela- tively speaking, there has been a significant increase in the value of these deals compared to 2023. Compared to the first three quarters of 2023, there has been a 66% increase in deal values. In comparison to other sectors in India, the technology, media and telecommunications sector has contributed to approximately 40% of the total deal value in the first three quarters of 2024. This trend has been consistent with global technology M&A trends. In 2024, India saw a rise in the number of uni- corns mostly in the tech space, including Money View, Rapido, Ather Energy, Krutrim and Perfios. Tech companies have also fared well in their ini- tial public offerings in 2024 including Swiggy, Sagility, Ola Electric, Ixigo, and Go Digit. There have been significant acquisitions, including Viacom 18 Media’s merger with Star India (joint venture value reported at USD8.326 million) and Bharti Airtel’s acquisition of a stake in BT Group. Notable reasons for the uptick in this financial year (2024-25) have been: • the Indian government’s focus on the technol- ogy sector in its budget for 2024-25, with a 52% increase in the budget allocation from the previous 2023-24 financial year; • changes in the Indian Foreign Exchange Man- agement (Non-Debt Investment Rules) 2019, especially in relation to cross-border share swaps between resident and non-resident parties; and
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