Investment bankers are bullish about their business, backed by a healthy pipeline of initial public offers, mergers and acquisitions and private equity investments.

Till date in 2020, the average Indian investment banking pool has jumped 30 per cent to $800-900 million from $600-700 million in 2019. This is expected to rise to $1 billion over the next 2-3 years.

During the year, deals in the equity capital market accounted for 37 per cent of the banking fee pool followed by private equity at 37 per cent. Mergers and acquisitions accounted for the remaining 26 per cent.

While fundraising via IPO has jumped 2.25 times to Rs 45,000 crore compared with Rs 20,300 crore in 2019, QIP has also doubled to Rs 79,100 crore from Rs 35,200 crore in 2019. Fundraising through rights issue has been Rs 65,000 crore compared with Rs 52,100 crore in 2019.

“The deal appetite has remained strong despite the pandemic. Easy and ample liquidity across the globe has been one of the key factors for driving deal making. We expect the investment banking fee pool in the next 12-34 months to get closer to $1 billion,” said S. Ramesh, MD and CEO, Kotak Mahindra Capital Company.

“In 2021, we may continue to see heightened IPO activity dominated by resilient sectors such as new age tech, health care and consumer,” said V. Jayasankar, senior ED and head ECM, Kotak Mahindra Capital Company.

In private equity, the total deal value has been $33 billion from 575 deals compared with $35.8 billion from 776 deals in 2019. “Unlike previous global crisis events, the private equity market has matured into a large and established segment in India with higher average deal size,” said Pankaj Kalra, senior ED, Kotak Mahindra Capital Company.

Mergers and acquisition

Of the total $109 billion of M&A activity in 2020, $ 65 million has come from inbound minority (foreign investor acquiring minority stake) and domestic majority transactions (Indian company acquiring majority stake in another Indian company).

“Apart from interest seen in stressed assets, there has been sale on account of restructuring for value creation and stake enhancement, divestment of non core assets by large corporate and MNC houses and exit by financial sponsors. We expect this trend to continue in 2021 including stock for stock transaction to preserve cash in current uncertain environment,” said Sourav Mallik, joint MD, Kotak Mahindra Capital Company.