Foreign investment banks are fast losing turf to their Indian counterparts, in managing initial public offers (IPOs) in the domestic market given - the latter’s consistent performance and efficient handling of pre and post-listing functions.
This is in sharp contrast to the trend visible earlier when global banking entities were the preferred choice for Indian companies looking to list. It was perceived that foreign bankers were better place to rope in foreign investors to subscribe to a public issue.
ICICI Securities, Edelweiss, Axis Bank, Kotak Mahindra Capital and IIFL Securities, rank at the top among investment banks winning IPO mandates so far in 2016, according to data compiled by Bloomberg.
The list of top 10 investment banks includes only one foreign entity — HSBC — which was one of the investment bank that managed the IPO of Equitas Holdings. Companies mulling an IPO need to appoint investment bankers to do the mandatory due diligence process as laid down by the Securities and Exchange Board of India (SEBI).
A year agoIn 2015, three foreign banks — Citi, Bank of America Merrill Lynch and HSBC — made it to the top 10 list in the corresponding period between January and June.
For the current calendar year, IDFC Bank, State Bank of India, JM Financial and Elara Capital also feature in the top 10 list.
Ajay Saraf, Executive Director, ICICI Securities, attributes the trend to the Indian banks’ consistency in managing pre-listing processes and delivering good returns post-listing as well.
“The investment banking teams of Indian banks have been more stable over the years in terms of team size and the attrition rate. Companies look at such stability when choosing bankers for their IPOs.
“Also, the track record shows that pre and post listing functions can be handled by Indian entities efficiently,” says Mr. Saraf.
Many foreign investment banking entities such as Standard Chartered, RBS, Barclays, UBS and Citi have either shut or downsized their India equity operations in the last couple of years. In most cases, the business decision has been in line with their respective global strategy of either moving out of or reducing operations in certain geographies to rationalise costs.
New listingsAccording to data from the National Stock Exchange (NSE), there have been 10 new listings in the current calendar year. Last year till June, six companies listed on the stock exchanges.
Some of the companies that made their debut on the exchanges this year are Parag Milk Foods, Ujjivan Financial Services, Thyrocare Technologies, Infibeam Incorporation, HealthCare Global Enterprises and Quick Heal Technologies among others.
