Dealmakers eye up India’s public sector assets

Hello,

This week, Gujarat-based Torrent Pharma became India’s fifth largest drugmaker after acquiring JB Pharma. This high-impact deal may well reshape India’s pharma landscape in the medium term. It also reflects consolidation trends in the sector.

Meanwhile, there are rumours that India-driven PE and VC firms may cash in on a market rally to clock up $3bn via exits as soon as investor moods coincide with India-focused funds’ liquidity cycles.

And finally, our Market Trends story looks at India’s big time infra plans as Mazagon Dock looks to buy neighbouring Sri Lanka’s Colombo Shipyard for around $53m, a rare but significant cross-border purchase in the maritime sector pointing to the country’s growing regional footprint.

I hope you enjoy this week’s roundup, and please do connect with me on LinkedIn to find out how I can help with your next M&A deal.

Let’s dive in.

Deal Tracker

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Market Trends

Are India’s public sector assets finally in play?

The Indian government is back on the disinvestment train after a few hiccoughs, but this time with assets that aren’t just loss-making ‘public sector units’ (PSUs) but also the country’s crown jewels, called ‘ratnas’ – all of differing size and heft. 

These disinvestments – from LIC’s mega-IPO in 2022 to the ongoing sale of IDBI Bank, and asset monetisation in the national highways company, NHAI, and Indian Railways – are not only about offloading post-independence and post-Covid deadweight but reshaping the public sector to invite private sector participation where it matters.

Once stalled because of political pressures, they are now moving. In recent weeks, the government has accelerated key processes: the IDBI Bank sale is approaching the financial bidding stage; PSU banks have been asked to list subsidiaries; and stake sales in railway wifi firm RailTel and ticket booking app IRCTC have begun. Even the long-awaited sale of Concor (Container Corporation of India) has moved into its active stage. 

And it’s creating fresh, lucrative M&A openings in infrastructure sectors such as transport, aviation, insurance, and railways (where land value is key).

Dealmakers may even look to greater private participation in PPP models across major cities, particularly in services like airport ground handling; maintenance, repair, and operations (MRO); and airspace operations.

So who’s buying? 

Despite the renewed push, political sentiment around disinvestment is mixed, which might be reflected in the government’s repeated failure to meet its own targets. As a result, there is the pressure on them to lower valuation expectations.

Land usage and post-privatisation protections such as labour migration have been clouded by regulatory ambiguity, plus the array of small and large government departments involved are not the most conducive for ease of doing business. Authorities such as DIPAM and sectoral ministries have indicated that standard operating procedures for disinvestment will be updated to enable smoother transitions and make assets investor ready, including land titling, faster labour transition policies and simplified valuation forms.

Indeed, this outlook hasn’t stopped a cohort of smart Indian business houses such as the Tatas, Adani, L&T, Brookfield India, Cube Highways, Torrent, and the domestic sovereign fund NIIF,  from actively bidding. 

Global investors too, such as Canadian pension fund of funds, CPPIB, Aussie investment bank, Macquarie, and Emirati sovereign fund Mubadala are on the scene, especially for long term operating contracts. PE, too, is moving from financial bets to direct ownership, particularly in infrastructure.

What’s the hurry?

India’s post-Covid capex pressures have left no room for inefficiency. The finance ministry is operating with fiscal realism as there is the risk, some say, that a change in political leadership could stall or reverse the current disinvestment strategy. The window may not be open long, especially if public resistance gains traction.

This shift toward an asset-light state also aligns with G20-style infrastructure diplomacy which aims to crowd in private capital while the government focuses on governance and regulation.

While the LIC IPO may not have deepened institutional interest as much as expected, roads, railways, and logistics assets offer a different investor profile. Future stake sales in GIC, New India Assurance, and PSU banks (covered in a previous Teaser India) are likely, pending regulatory fixes. 

More crossholding sales like those in UTI AMC and IFCI may also surface.

Deal and policy milestones

While true privatisation remains rare as bids often fall short of price expectations, several significant developments are underway:

• Sovereign wealth fund proposal will consolidate and reposition high value public sector units
• Indian Railways’ dedicated freight corridors that could reshape freight logistics economics.
• NHAI InvIT and TOT bundles: the FY25 pipeline was announced recently with Macquarie, NIIF, and Cube Highways already showing interest.
• IBC-driven infra M&A: Insolvency processes are opening up stressed infra assets, presenting new acquisition avenues

Looking at the big picture, it seems clear that meaningful monetisation, not fire sales, is on the agenda.