Commenting on the deal street trajectory for 2022, Grant Thornton’s Prashant Mehra, speculated that things may pick up towards the end of the year in December.
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Prashant Mehra, who is a partner at Grant Thornton Bharat, talked about the state of the deal street in an interview with CNBC TV18. Addressing the slowdown which has happened since last year and the probable speculations on the state of the deal street, he highlighted the reasons why companies are not taking any action when it comes to transactions.
Addressing the inaction, Mehra said that it’s a ‘wait and watch situation’, wherein companies had been expecting a Fed rate increase in July which then happened in August, and he mentioned the RBI rate hike as well. The situation is likely to remain same till the end of this year, he also predicted.
“We were expecting a Fed rate increase in July that happened in August beginning, also the RBI increase happened, I think everybody is adopting a very wait and watch approach and waiting for things to unravel before they take final decisions on closing deals,” said Mehra. “I would say that the next couple of months will probably be the same but yes towards the end of the calendar year things will pick up.”
When asked about the source of the traction and the trend regarding deals, Mehra mentioned two positive signs – a transaction in the Edtech space and positive movement in the infrastructure sector.
Mehra said, “I think the last month also showed, you know, two positive signs one we saw a transaction in the Edtech space something that we have been waiting for quite some time and were expecting that to happen, we’ve seen some positive movement on the infrastructure side as well. Currently, there is a lot of traction in the tech sector definitely but also in the infrastructure sector.”
He also remarked that while in the remaining part of August, nothing significant is likely to happen but the trend seems to be in the tech, infrastructure, banking finance and fintech sectors.
Commenting on consolidation in the tech startup space and the chances of resurgence of the trend of investment of foreign money in startups, he said that in the last fortnight, the way the stock market has touched 60,000 is a sign of foreign money flowing in via FIIs. He predicted that consolidation in the tech industry would continue, while closures may take a couple of months but traction will definitely continue.
“We’ve already seen that in the last fortnight or so, the stock market has now touched 60,000, I think that’s an indication that foreign money in terms of transactions will also start flowing. As far as consolidation is concerned, it is flavor of the season and will continue for a while, specifically in the tech industry, with the startups becoming unicorn they would want to look at consolidations with small startups which are not going anywhere. They’re being looked at from a backward for forward or a parallel integration by corporates.”
When asked which sectors are likely to gain traction and increase the volume as well as value in the deal street, Mehra noted that there will be more activity in the Edtech and Fintech related sectors.
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