Primary market revival earns deal makers a record $1 billion fees

According to UK-based global deals analytics firm Refinitiv, on the back of thriving equity capital market deals and trending initial public offerings (IPOs) in India, investment bankers reaped a massive 41% increase in their fees at $967.5 million for the first nine months as compared to last year.

Citi, with $58.6 million in investment banking fees, earned the most from deal making activities in India according to Refinitiv. ICICI Bank Ltd, and Axis Bank Ltd followed Citi, earning $56.6 million and $56.4 million respectively from investment banking fees. Goldman Sachs investment banking income rose to $54.4 million from deal making in India, revealed the data.

Through equity deals domestic firms and their promoters raised $18.4 billion in the first nine months of 2023, a 34.4% jump from the same period of last year, said the London listed data tracker group.

This is the highest in terms of proceeds for the January-September period this year since 2021.

There were 253 equity and equity-linked deals for this period, which is up 30.4% year-on-year.

Through these equity capital market mandates alone, bankers earned $194.3 million, up 38% year-on-year, while M&A advisory fees grew 34% year-on-year to $362 million, said Refinitiv.

India’s primary market is on an uptrend since early March when US-based asset manager GQG Partners Llc invested around $2.2 billion in four Adani group firms.

The trend continued on Thursday with shadow bank Bajaj Finance Ltd announcing plans to raise up to ₹8,800 crore through qualified institutional placement (QIP), along with a ₹1,200 crore fund-raising plan via warrants.

Furthermore, domestic firms raised at least $3.5 billion through IPO during the first nine months of 2023 and several more IPOs are in the pipeline according to New-Delhi based primary market data tracker Prime Database.

Even though the number of stock debuts through IPOs increased in the January-September period, the amount raised via IPOs is still 38% lower than last year as most of the public floats have been relatively smaller in size this year.

At least ₹26,300 crore was raised by 31 Indian firms via IPOs in April-September, according to Prime Database.

This is 26% lower than the ₹35,456 crore raised by 14 IPOs during the first half of FY2023.

To be sure, ₹21,000 crore of the IPO mobilisation last fiscal came from the mega IPO by state-run insurance behemoth Life Insurance Corp. of India alone.

In August, Mint reported that the country’s primary market may be headed for a revival with at least 71 companies planning to launch their IPOs in the second half of the current fiscal.

According to Prime Database, Indian firms may raise as much as $10.7 billion or ₹89,069 crore via IPOs in the coming six months.

On Thursday, a Refinitiv report showed that through follow-on offerings, which accounted for 81% of India’s overall ECM proceeds so far, Indian firms raised $14.9 billion in the January-September period, up 85.0% from last year.

A Mint analysis in August showed that key stakeholders, including promoters of listed Indian companies, have sold shares worth over ₹ 1.35 trillion through bulk and block deals during the calendar year so far, out of which deals worth over ₹92,800 crore were concluded in the first five months of FY24, which is more than double that of the same period last year.

The latest Refinitiv report, however, showed a lull in mergers and acquisitions.

M&A deals in terms of overall size fell to a three-year low in the first nine months of 2023, totaling $65.6 billion.

“Private equity-backed M&A in India amounted to $11.1 billion, down 58.1% from a year ago, and the lowest first nine months period by value since 2020," said Refinitiv.

“High technology" sector attracted the largest number of deals in the January-September period of 2023, with the overall size totalling at $5.9 billion, said Refinitiv.