Foreign investment banks are fast losing turf to their Indian counterparts, in managing initial public offers (IPOs) in the domestic market. Indian investment banks have proved themselves in terms of consistent performance and efficient handling of pre and post-listing functions.
This is in sharp contrast to the earlier trend of global banking entities were the preferred choice for Indian companies looking to list. Foreign bankers were perceived to be better placed to rope in foreign investors to subscribe to a public issue.
ICICI Securities, Edelweiss, Axis Bank, Kotak Mahindra Capital and IIFL Securities, are 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 banks that managed the IPO of Equitas Holdings. Companies planning 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.
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In 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 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.
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Track record
“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.
According to data from the National Stock Exchange, there have been 10 new listings in the current calendar year. Last year till June, six companies listed on the stock exchanges. Some companies that made their debut on the exchanges this year are Parag Milk Foods, Ujjivan Financial Services, Thyrocare Technologies, Infibeam, and HealthCare Global Enterprises.
The list of top
10 investment
banks this year includes only one foreign entity