India: A Corporate/M&A: Bengaluru-based Overview

Overview

India’s M&A market remained resilient through 2025 and 2026 so far, navigating a complex global backdrop. Geopolitical uncertainties have created strong headwinds due to renewed tariff tensions and ongoing conflict in the Middle East, contributing to supply chain disruptions, energy price volatility, exit of foreign institutional investors (FIIs) and longer deal cycles globally.

While these headwinds were felt in India, the country has benefited from tailwinds such as improved bilateral trade relations with the USA, including tariff reductions from 50% to 18% in February 2026, and bilateral agreements with the EU, Oman and UK. India has continued to outperform peers and benefit from global “China+1” strategies, particularly in the manufacturing and industrial sectors. While deal activity experienced a slowdown between September–October 2025 and January–February 2026, momentum recovered materially post February–March 2026.

Financial sponsors have increasingly become significant business owners and sellers in India, driving substantial sell-side activity. Sovereign wealth funds (SWFs) and limited partners (LPs) globally are exhibiting greater confidence in co-investing and taking direct exposure in India than at any point previously.

As against the preceding year, India recorded approximately 18% growth in deal value despite a moderation in deal volumes, with M&A activity registering 26% growth in value and cross-border M&A registering 155% growth in value, driven principally by domestic consolidation and high-value strategic transactions. Outbound deal-making has grown at a fast rate, reflecting the increasing global ambitions of Indian corporates.

Deal activity is increasingly driven by large-ticket strategic consolidation, particularly across the defence and defence technology, financial services, energy, technology and industrial sectors. While there have been multi-billion-dollar deals than in the preceding years, the market has deepened significantly at the mid-market level, reflecting strong participation from private equity players. Notably, while FIIs are exiting, domestic institutional investors and strategic investors are increasingly investing in Indian companies, signalling strong internal demand and confidence. Further, investors are not anxious to deploy available capital, deploying only where strong sector-driven or asset-driven rationale exists – with profitability as the decisive theme. 

Deal Structuring and Execution Trends

Indian deal structuring continues to evolve in response to judicial pronouncements, regulatory changes, persistent valuation gaps, etc. Moderate adjustments in valuation expectations are emerging, though seller-sponsors remain willing to wait for optimal pricing. Common features of deal structuring include:

• earn-outs and deferred consideration structures;
• minority investments with structured control rights;
• investments into hybrid/ convertible instruments; and
• reverse flips (internalisation).

Auction processes have become a preferred exit strategy for value maximisation, while court-driven schemes of arrangement continue to gain traction.

Sectoral Drivers and Regional Dynamics

Core sectors such as information technology (IT)/information technology-enabled services (ITeS), manufacturing, financial services and pharmaceuticals remain active. Private equity players are also focusing on:

• defence and defence technology;
• renewable energy;
• manufacturing and industrial platforms;
• technology, AI and digital services;
• logistics, warehousing and data centres; and
• healthcare and education businesses.

AI integration and AI-driven capabilities have emerged as a top factor in valuing target companies, with investors focused on businesses that have adopted scalable AI-enabled platforms.

Infrastructure and real estate sectors have continued to remain active for deal-making, driven by governmental initiatives and improved concession structures. South India, and Bengaluru in particular, continue to be key to India’s M&A ecosystem. The region remains a hub for:

• technology-led M&A and venture capital activity;
• global capability centres (GCCs) of multinational corporations;
• healthcare; and
• AI, software as a service (SaaS) and deep-tech innovation platforms.

Significant growth and M&A activity are also being seen in Tamil Nadu and Karnataka in industrial, logistics and infrastructure-linked real estate, aligned with manufacturing expansion goals. Deal-making has also expanded into tier-two cities like Mysore, Mangalore, Kochi, Coimbatore and Visakhapatnam, with venture capital cheque sizes increasing materially.

Regulatory Environment and Merger Control

While regulatory oversight has increased, Indian regulators have adopted a more co-ordinated and enforcement-focused approach to alleviate investor concerns.

On the merger control front, the introduction of the deal value threshold (DVT), where transactions exceeding INR2,000 crores with substantial business operations in India now require notification irrespective of asset/turnover thresholds, has expanded the scope of transactions notifiable with the Competition Commission of India (CCI). The Securities and Exchange Board of India (SEBI) has also overhauled and provided clarity in delisting transactions through the introduction of a fixed-price delisting mechanism as opposed to a reverse book building exercise, improving execution certainty.

On cross-border deals from land bordering countries (LBCs), Press Note 2 of 2026 (PN2) has clarified the regulatory position on determining beneficial ownership by linking it to a 10% threshold of shares/capital/profits, and also introduced a pre-deal notification for investments from LBCs not requiring governmental approval. However, uncertainties remain regarding PN2’s implementation.

Private Equity: Maturity and Exit-Led Activity

Private equity activity has entered a more mature phase, characterised by:

• increased exits, including secondary sales;
• platform-building and consolidation strategies; and
• greater focus on profitability, governance and operational efficiencies.

Private equity-backed companies are now a material driver of sell-side M&A activity.

Public Markets and IPO Pipeline

While deals involving public listed companies have reduced in volume and size, and IPO activity has moderated relative to the post-pandemic period, public markets remain the most credible exit pathway for investors. Companies contemplating listings have focused on profitability, governance and institutional readiness, timing market entry to favourable windows. This has resulted in a robust pipeline of IPO-ready companies, even where listings are deferred pending market conditions.

From a South India perspective, recent activity includes listings across the technology, consumer and real estate sectors, with a growing pipeline in healthcare, e-commerce and fast-moving consumer goods (FMCGs). Late-stage companies, particularly from the Bengaluru ecosystem, continue to view IPOs as the preferred long-term liquidity route.

Emergence of Sports and IPL-Led Deal Activity

A notable feature of recent deal activity has been the increasing institutionalisation of sports assets, particularly in relation to the Indian Premier League (IPL). Transactions involving IPL franchises, such as high-profile sales of Royal Challengers Bangalore and Rajasthan Royals to consortiums of Indian corporates and global financial investors, have driven valuation discovery for sports IP as an emerging asset class.

Outlook and Conclusion

The outlook for Indian M&A remains positive, notwithstanding external factors. Deal activity is expected to be driven by:

• continued domestic consolidation and scale-building;
• large strategic transactions and infrastructure-linked investments;
• sustained private equity exit activity; and
• ongoing cross-border capital inflows, particularly into the manufacturing, technology and renewable energy sectors.

The government’s emphasis on infrastructure development, defence indigenisation and a digital and AI-first economy is expected to shape deal activity materially. Policy momentum including liberalisation of foreign direct investment (FDI) norms, simplification of regulatory approvals and incentivisation of domestic manufacturing are likely to remain key enablers. Special focus areas include defence and defence technology, AI/data infrastructure, healthcare, manufacturing, real estate and infrastructure.

While traditional hubs will continue to attract large-ticket transactions, South India – and in particular, Bengaluru – is expected to see significant growth in technology, innovation and platform-based deal activity, having emerged as a more vibrant and dynamic market as compared to the west and north.