QIPs to lead fundraising activities: Edelweiss Securities' Gopal Agrawal

“We expect high-growth companies and a few private equity (PE)-backed companies to tap into the capital market with public issues,” says Gopal Agrawal, co-head, investment banking, Edelweiss Securities. In an interview with Ashley Coutinho, he says qualified institutional placements (QIPs) will lead capital-raising activities this year, led by infrastructure and financial services firms. Edited excerpts:

How do you see the initial public offering (IPO) market this year?

Four to five IPO launches are planned in the ongoing quarter. Performances of these IPOs after listing shall be a good indicator of the IPO appetite in the market. We expect scaled and high-growth companies and a few PE-backed companies to go the IPO way. Some of the sectors looking for IPOs include insurance, small finance banks, and speciality chemicals.

How do you see the activity in terms of QIPs and buybacks? 

There was slowdown in fundraising activities closer to the general elections. However, we expect companies to raise long-term capital and plan future capital expenditure in the later part of the financial year. We expect QIPs to lead the capital-raising activities, with infrastructure and financial services companies cornering the lion’s share. For now, we have seen a lot of companies planning buybacks keeping their plans on hold after the recent budgetary announcement.

Where do you see mergers and acquisitions (M&As) going forward? 

We believe M&As will remain high on the agenda in sectors such as financial services, information technology/information technology-enabled services (IT/ITeS), infrastructure, and consumer. In infrastructure and financial services, it will be dictated by the stress in balance sheets, while in IT/ITeS and consumer, it will be because of consolidation in the fragmented sub-sectors. The other big theme where momentum remains strong is on PE buyouts. We believe in the buyout space. PE players would pose very strong competition to the strategic players.

How do you see infrastructure as a sector in terms of investments as well as deal activity?

Investments in infrastructure have been on the rise in the last few years. Most of the action is in road, renewable, and transmission sectors. An emerging trend is the entry of large investors preferring platform deals vis-à-vis single-asset transactions. Infrastructure investment trusts (InvITs) are increasingly becoming popular and a lot of new pools of capital are investing in InvITs. We have been quite active in the infrastructure space, with maximum deal closures by any advisors in the space.

Will patient, long-term capital via sovereign and pension funds continue to find its way into India?

We do expect the trend to continue. Pension and sovereign funds typically have large pools of capital to deploy. Compared to their own standards of investment, this is just the start. Over time, we expect much larger capital coming from such investors. 

Domestic investment banks have done well in the past few years. What are your plans, focus areas, and strategy for the course of this year? 

Edelweiss investment banking has consistently remained on top of the league table in capital markets for IPOs and QIPs. In the last two years, we have been an advisor to several PE and M&A deals as well as a few marquee closures, making us a leading full-service investment bank. Our strategy is to grow our advisory share in sectors where the maximum action is.