Investment bankers net decade-high $292 million from ECM activity

M&A advisory fee down 5.1 per cent to a three-year low of $303 million

For investment bankers operating in the equity capital market (ECM) segment, 2020 turned out to be among the best years in a decade. According to Refiniv, ECM underwriting fee in India generated $291.7 million, 70 per cent more than that in 2019 and the highest in over a decade. ECM activities comprise several kinds of equity capital raising, including initial public offerings (IPOs), rights, QIPs, and block deals.

Mergers and acquisitions (M&A) advisory fee, on the other hand, fell 5.1 per cent from the previous year and was at $303.2 million, the lowest since 2017. Debt capital markets (DCM) underwriting fee was down 17.6 per cent from a year ago, and syndicated lending fee fell 13.5 per cent from last year.

ICICI Bank topped India's investment banking fee league tables in 2020, with a 12 per cent market share and $123.2 million in fees. Morgan Stanley followed, taking a 10.7 per cent market share and $109.6 million in fees. State Bank of India took the third spot with a 9.9 per cent market share and $101.1 million fees.

India’s ECM activities hit an all-time high in 2020 and companies raised $37.6 billion, a rise of 69.6 per cent in proceeds from a year ago, surpassing the annual record set in 2007 of $31.2 billion.

The biggest equity issuance in 2020 was Reliance Industries's $7 billion rights offering. Reliance Industries’ rights issue is currently India's largest-ever ECM offering, surpassing the previous record set by ICICI Bank's $4.6 billion follow-on offering in June 2007.

A flurry of follow-on offerings totalled $32.9 billion, up 67.6 per cent from last year, and accounted for 67.6 per cent of India's overall ECM proceeds. Indian companies raised $3.6 billion in 2020 through IPOs, a 45.1 per cent increase in proceeds from last year, the highest since 2018.

In the fourth quarter of 2020, at least 16 Indian companies launched their IPOs and raised $1.5 billion. ECM Issuance from the financials sector accounted for a majority of India’s ECM activities in terms of proceeds. Energy & power took the second spot with an 18.9 per cent share, due to Reliance Industries' $7 billion rights offering. The telecommunications sector with an 11.3 per cent market share came third.

When it came to ECM ranking, JPMorgan led with $4.5 billion in related proceeds and 12.1 per cent market share. HSBC and BofA Securities took the second and third spits, capturing 8.4 per cent and 8.1 per cent market share, respectively.

Elaine Tan, senior analyst, Refinitiv, said Covid-19 presented several opportunities, particularly in sectors that thrived during the pandemic, and driven deal-making activities —from domestic consolidations to opportunistic acquisitions by strategic buyers or cash-rich private equity investors. 

"This will potentially continue in 2021 as companies adjust to build resilience and continue to take advantage of the anticipated recovery in the post-Covid-19 pandemic era."