Refinitiv report : India I-banking fees decreased by 25% in H1CY2022 despite record M-;A and IPO profits

8 Jul 2022 , 01:41 PM

According to a research titled “India Investment Banking Review First Half 2022” by Refinitiv, a business of the LSEG (London Stock Exchange Group), investment banking fees in India’s transaction landscape during the first half of 2022 decreased by 25% compared to the same period the previous year.

This is true despite the period seeing an all-time high in M&A activity (led by the massive HDFC Bank-HDFC merger, valued at $60.4 billion), both in terms of value and announced deals as well as IPO proceeds. According to the Refinitiv data, domestic investment banking activities produced total fees of $377 million, which was the lowest first-half period since 2016.

The segment breakdown is shown below. Underwriting fees for the equity capital market fell by 33.4% to $94.9 million. DCM underwriting fees came to $81.4 million, a decrease of 8.5% from the previous year. Completed M&A consulting fees were $145.9 million, a 1.5% increase from the previous year. Syndicated loan fees earned $54.7 million in the first half of 2022, a 57.4% decrease from the same time the previous year.

An announcement regarding India According to the Refinitiv report, M&A activity reached an all-time high in the first half of 2022, reaching $130.3 billion, more than double the value of the first half of 2021. This made it the biggest semi-annual period since records began in 1980. The number of acquisitions that were announced increased 30.3% year over year during the busiest time ever. Target India M&A reached a total of $122.6 billion, an increase of 123.8% from the same time last year. Domestic M&A activity increased by a record $101.1 billion, or 241.7%, over the same time the previous year, setting new highs.

The largest Indian participation deal in history saw HDFC Bank Ltd merging with Housing Development Finance Corp Ltd (HDFC) in a $60.4 billion merger. Two other significant transactions announced in the first half of the year included L&T Infotech’s merger with Mindtree and Adani Group’s acquisition of Holcim’s domestic cement business.

The Financials sector, which had a market share of 53% and a total value of $69.0 billion, was the focus of the majority of deal-making activity involving India. The High Technology sector, which witnessed the most transactions, saw a total of $16.5 billion, an increase of 78.3% from the previous year with a market share of 12.7%.

The first half of 2022 saw the lowest first-half period since 2016 with $9.1 billion in proceeds raised by Indian equity capital markets (ECM), a fall of 39.9% from the first half of last year. However, the quantity of ECM offerings increased by 11.1% annually. Indian issuers’ initial public offerings (IPO) raised $5.2 billion in the first half of this year, a 26.1% increase from the same period last year and the largest first-half period in terms of proceeds ever. IPOs increased in number by 53.8% year over year. This year, Life Insurance Corp. priced the largest IPO in India, raising $2.7 billion.

The total amount raised by follow-on offerings, which made up 43.4% of India’s overall ECM revenues, was US$3.9 billion, down 63.0% from the previous year, and there were 13.8% less follow-on offerings altogether. The majority of ECM activity was accounted for by ECM Issuance from India’s Financials sector, which had a 34.4% market share and generated US$3.1 billion in proceeds, a 56.3% decrease year over year. Consumer Staples showed a sharp increase in sales and won 15% of the market, with Healthcare coming in second with 14.6%.
With 1.6 billion in linked proceeds and a 17.8% market share, Kotak Mahindra Bank is currently in first place for India’s ECM underwriting, according to the Refinitiv report.