Equity capital markets proceeds up 38% at $21.4 billion in 2019

Fees from investment banking activities touched $1 billion in 2019, a 5.2 per cent increase over the previous year and the second-highest mop-up after the record $1.2 billion collected in 2017, according to a report by Refinitiv.

Debt capital market underwriting fees fetched a record $251.7 million, up 70.1 per cent from a year ago. Equity capital markets (ECM) underwriting fees reached $165.2 million, a 1.6 per cent uptick from 2018, while syndicated lending fees fell 5.1 per cent from last year and generated $322.4 million. Merger and acquisition (M&A) advisory fees slowed down and totalled $301.3 million, down 11.2 per cent from the record high set a year ago.  

State Bank of India (SBI) took the top spot in India’s investment banking fee league table, with 11.2 per cent market share and $116.4 million in related fees, according to the Refinitiv report. Axis Bank was second, taking an 8.3 per cent market share, while ICICI Bank was third with 7.6 per cent share.

ECM raised $21.4 billion this year, up 37.5 per cent in proceeds from 2018. Follow-on offerings, which accounted for 88.3 per cent of India’s overall ECM proceeds, grew 73 per cent from a year ago, raising $18.9 billion in 2019, the highest period for follow-ons. Rights offerings of $7.4 billion accounted for 34.8 per cent of India’s ECM proceeds, driven by Vodafone Idea’s $3.6 billion and Bharti Airtel’s $3.5-billion issuances.

Initial public offerings experienced their third consecutive annual decline, totalling $2.5 billion in 2019, down 46.2 per cent from last year.

Financials accounted for majority of the ECM activity with 43 per cent market share worth $9.2 billion in proceeds, a 27.9 per cent increase from last year.

Primary bond offerings hit a record high and totalled $86.4 billion in 2019, an 88.7 per cent increase in proceeds from a year ago. SBI launched a $1.2 billion bond offering through its London branch, the largest bond issuance from an Indian issuer this year.  Issuers from the financial sector captured 68.2 per cent of the market share that amounted to $59 billion, a 52.5 per cent increase in proceeds raised from last year ($38.7 billion).

Source: Refinitiv

Power Finance Corporation was the most active Indian bonds issuer in 2019, raising $8 billion from 17 issuances. Other notable companies that issued bonds this year included REC (formerly Rural Electrification Corporation), Housing Development Finance Corporation, and Indian Railway Finance Corporation.

M&A activity reached $84.2 billion in 2019, a 36.6 per cent year-on-year decline after the record set in 2018. Target India M&A stood at $78.2 billion, down 32.2 per cent from the same period last year. The largest deal in 2019 was Brookfield Asset Management’s $3.7 billion pending acquisition of Reliance Industries’ Tower Infrastructure Trust. This was one of the two big deals between Brookfield and Reliance announced in 2019; Brookfield’s India Infrastructure Trust also agreed to acquire Reliance’s Pipeline Infrastructure subsidiary for $1.87 billion this year.

Total cross-border slowed down as both inbound and outbound M&A activity in India decreased. India’s inbound M&A activity fell 35.4 per cent from a year ago and reached $36.3 billion. The US, Canada, and Japan were the most active foreign acquirers in India, and accounted for 28 per cent, 20 per cent, and 13 per cent market share, respectively, of India’s inbound M&A.  

Outbound M&A transactions declined 80.2 per cent from the same period last year and totalled $2.7 billion.