Next year could be even busier for IPOs: Anuj Kapoor of UBS

He says as far as India is concerned, the IPO volumes have been over $12 billion this year, which is more than combined volumes of past six years

The year 2017 has been the best-ever for the initial public offering (IPO) equity market and next year could be even busier, says ANUJ KAPOOR, managing director, investment banking, at the India arm of UBS, the Swiss global financial services entity. Edited excerpts from a select media briefing:

How was 2017 for UBS investment banking?

We have had a good year in terms of not only IPOs but more so on block deals (large equity share sales). That’s the area where we distinguish ourselves vis-à-vis other banks. Our clients and we think we do it better than others on the Street, given our strong equity franchisee and understanding of the Indian markets for many years. We are number two on the equity league tables this year.

The standout transaction this year has been the block we did on Bharti Airtel for the Qatar Foundation. And, a couple of other blocks we did for Bharti Infratel. All these transactions were hard-underwritten, not common in India. The $1.5-billion Bharti Airtel block was perhaps the largest-ever underwritten block done in the Indian stock market. The bank stepped up and took a lot of risk.

How has been the IPO market for UBS?

Last year, we did ICICI Prudential Life, largest IPO for the year. This year, we were part of the HDFC Standard Life IPO. At this point, the IPO pipeline is very robust. We are marketing currently for Reliance General Insurance and CMS. Both are done with 80-90 per cent of their marketing. In the new year, we will think of the timing for these transactions. We are also working on the Kalyan Jewellers IPO. There are another three-four not in the public domain, where work has started.

Given the state of the markets and the pipeline, a six-seven IPO pipeline looks very healthy. We are very careful about the deals we pick. Going forward also, we want a judicious mix of blocks, as well as qualified institutional placements (QIPs). That’s going to be our focus area. This year, we did one QIP for Apollo Tyres but, going forward, that’s going to be one of our key focus areas.

Will 2018 volumes top that of 2017?

As far as India is concerned, the IPO volumes have been over $12 billion this year. That’s more than combined volumes for the past six years. Difficult to predict but if the market stays where it is, the next year will be even busier. The pipeline right now is a lot busier this year going into next year than what it was a year ago. We should be beating this year comfortably, is our sense. But, having said that, the big caveat is how the market behaves.

Do you see any change in the complexion of fund raising?

Financials will continue to dominate. Capital is a raw material for them. My sense is financial paper will be more than a third of the total supply. We will see a lot of QIPs by banks and NBFCs (non-bank finance companies). It has already started. We haven’t seen real estate join the IPO party; it could be next year. The real estate market has not been doing well in the past few years but some of the organised and larger players, post-Rera (the new regulatory law for the sector) will be able to distinguish themselves. But, the capital expenditure cycle on the private side has not really picked up yet and is not likely to pick up soon. So, money for expansion outside of financial services might not be needed to that extent. Also, the trend of private equity monetisation seen this year is going to continue in a big way.