There’s an acquisition every two days in India. Here’s why

Photo credit: Hypnotica Studios Infinite.

Classifieds portal Quikr set the tone at the start of the year by acquiring one of India’s top property portals, CommonFloor. The acquisition was meant to scale up Quikr’s property vertical QuikrHomes and blank out rivals in the market like SoftBank-backed Housing, which had been buffeted by setbacks.

The first six months of the year saw 88 mergers and acquisitions, which means there’s an acquisition every two days, shows data from Xeler8. Apart from consolidation in the property and ecommerce markets, local services, software-as-a-service (SaaS), and analytics have been seeing a lot of M&A action.

The trend has continued in July. This week, we have the buyout of fashion portal Jabong for a song by ecommerce giant Flipkart, which had already acquired another leading fashion portal Myntra earlier. Fashion is a lucrative category in ecommerce, but the Jabong buyout comes at a time when its business and valuation had plummeted in a market dominated by Amazon and Flipkart.

See: Flipkart just acquired Jabong. Here’s what it gets with the big buy

Consolidation time

The Jabong buyout was preceded by a couple of other major acquisitions this month. Quikr added muscle to its jobs vertical QuikrJobs by acquiring Hiree.

Acquirers from overseas are also sniffing out opportunities in this tough market.

Like CommonFloor, Hiree was a fast-rising startup, carving out a niche for speedy hiring with US$3 million of funding from IDG Ventures last year. But it ran into rough seas in the face of increasing competition, and fired many of its employees earlier this year.

Another notable acquisition this month was that of chat commerce app Lookup, which had marquee investors like Twitter co-founder Biz Stone and Beenos founder Teruhide Sato. The buyout by NowFloats, which provides an online platform for offline businesses, had a lot to do with market conditions.

“It’s a tough market and we all know it,” admitted Lookup founder Deepak Ravindran to Tech in Asia. “After several rounds of internal discussions, we consulted with our investors and decided to accept the offer.”

Indians are getting more into gadgets and the internet than ever, but 2016 has nonetheless been a painful one for many of the country’s startups. Photo credit: Romtomtom.

Acquirers from abroad are also sniffing better opportunities in this tough market. Amidst the acquisitions of Jabong and Hiree this week, there was also Bangkok hiring site GetLinks’ buyout of Delhi-based LetsCatchUp. Earlier in the year, US-based auto electronics maker Visteon acquired Bangalore-based auto infotainment and connectivity software maker AllGo for an estimated US$22 million.

The shift from last year

Mergers and acquisitions began to pick up pace in India last year as well-funded local startups gobbled up others for faster, inorganic growth. The biggest of them were Snapdeal’s buyout of mobile top-up site FreeCharge for an estimated US$400 million and Ola’s acquisition of TaxiForSure for US$200 million. These acquisitions came under pressure for fast growth as global rivals Amazon and Uber made inroads into the market.