Indian investment bankers are set for their most rewarding year as initial local public offerings head to an all-time high despite devastation from a deadly wave of Covid-19.
Listings in Mumbai have already raised $ 10.2 billion this year, according to data compiled by Bloomberg. Banks that run these deals have racked up record fees of nearly 14 billion rupees ($ 189 million), more than double the amount they earned in the previous peak in 2017, according to figures provided by Prime Database. , based in New Delhi.
The exceptional amount of fees has become all the more important for bankers during a particularly trying year. A massive surge in coronavirus infections in April and May has reached the doors of Mumbai’s urban wealthy, a group that is typically isolated from the country’s worst disasters. Bankers were among those who struggled to organize oxygen tanks and intensive care beds for loved ones, while juggling their workload amid all the IPOs.
âThere have been cases of bankers showing up for work despite death in the immediate family,â said Nipun Goel, chairman of investment banking at IIFL Securities Ltd. in Mumbai. âI was shocked to see my colleague on Zoom calls. He said, ‘Let’s do this’ because he wanted to keep his mind busy.
India is no exception to a global IPO frenzy in which companies ranging from tech startups to jewelers and drug makers have raised around $ 476 billion globally this year. Liquidity, low interest rates and demand from retail investors are driving companies to go public.
At least 64 Indian companies hit equity capital markets in 2021 as a pandemic-defying stock rally took the S&P BSE Sensex to a record high. The benchmark is Asia’s top performing major index this year. Initial sales of shares could reach Rs 1 trillion in 2021, said Jayasankar Venkataraman, head of equity capital markets at Kotak Mahindra Capital Co. in Mumbai.
âWe are working 24/7,â Venkataraman said. âWhen the market is good, it is only natural for issuers to speed up their listing plans. “
Zomato Ltd., a food delivery start-up backed by Jack Ma’s Ant Group Co., raised $ 1.3 billion in a July listing, grossing bankers around Rs 2.4 billion in fees, according to the reports. data compiled by Bloomberg. Paytm, the digital payments start-up backed by SoftBank Group Corp., has filed a claim to mop up up to Rs 166 billion.
Others are slated for 2022. The Indian government is considering a mega IPO, selling up to 10% of state-owned Life Insurance Corp. of India for a valuation of at least $ 109 billion, which would be the largest in the country to date. Mumbai-based generic drug maker Macleods Pharmaceuticals Ltd. is targeting a listing next year that could bring in around $ 1 billion, Bloomberg News reported on Tuesday.
As in other parts of the world, the pandemic has accelerated the adoption of digital platforms in India, helping to shorten the process. The so-called road shows in which arrangers jump from town to town to give presentations to investors are now fully completed in a matter of hours with Zoom calls several weeks ago.
âEfficiency has improved dramatically and bankers are multitasking with no travel schedules,â said Venkataraman of Kotak Mahindra, who boarded a plane for the first time in a year in February.
Previously, bankers spent less time with their families thanks to the demands of constant travel, but with blockages, working from home and other restrictions, they no longer complain about it, he said. Although they are at home, their loved ones are still missed as bankers end up spending most of their time on conference calls or staring at their computer and phone screens.
Deprived of sleep
âThe work-life balance of investment bankers, mainly the junior ones, has been called into question,â said Vijay Vaishnav, founder of Indusion Consulting Services Pvt., An executive search firm in Mumbai. . “They tell us they’re not getting enough sleep because of the type of fundraising pipeline.”
To make matters easier, some financial institutions like Mumbai-based ICICI Securities Ltd., which are partially open – including during late hours – offer transportation to transport staff between office and home in the sprawling metropolis. A few are even cutting back on small IPOs to focus on bigger, more lucrative issues.
Ajay Saraf, executive director and head of investment banking at ICICI Securities, said he decided to only handle offers above Rs 10 billion. âIt’s crazy,â he said, referring to the IPO rush.
Others like Citigroup Inc. are hiring more to cope with the workload. The US bank, which has been in the South Asian country since 1902, said this month it added eight new positions to its investment banking team – mostly juniors – shifting the local team from 25% to 40.
While these bankers don’t see a major change in their fixed salaries, a massive increase in their variables is to be expected as most arrangers have more than surpassed their annual targets, said Vaishnav of Indusion Consulting.
âI haven’t seen such dynamism and overall buoyancy in my past 25 years,â said Goel of IIFL Securities. âA lot of it is about the excitement and satisfaction of bringing new stories to market. Money is just a by-product.