A bronze bull statue stands at the entrance to the Bombay Stock Exchange (BSE) building in Mumbai, India
Courtesy: Dhiraj Singh

Indian investment bankers collect $347 million from record $18 billion in IPOs this year

Investment bankers in India are likely to have their greatest year so far, making about Rs 2600 crore (~$347 million) in fees from domestic initial public offerings (IPOs), which have touched an all-time high in 2021.

A bronze bull statue stands at the entrance to the Bombay Stock Exchange (BSE) building in Mumbai, India
Courtesy: Dhiraj Singh

According to data compiled by Bloomberg, around 110 firms, spanning between online grocers to food delivery and beauty startups, floated their shares on Indian bourses this year, raising about $18 billion. The fees collected by banks managing such first-time share sales have more than quadrupled since 2017, according to data from the New Delhi-based Prime Database.

Jayasankar Venkataraman, head of equity capital markets at Kotak Mahindra Capital Co Ltd. said, “It was an extraordinarily busy year, something I haven’t seen in my 30-year career. Investment bankers carried work home and they weren’t fully switched off.”

The IPO bonanza, which was accompanied by a record high in the benchmark domestic stock index in October, was driven by companies such as One97 Communications Ltd., Zomato Ltd., FSN E-Commerce Ventures Ltd., and PB Fintech Ltd. The series of IPOs in India has followed the bigger trend in Asia, where all firms combined have raised over $181 billion this year, an unprecedented number.

One97 offers digital payment & financial services under the brand name Paytm; while Zomato is a food delivery firm; and FSN E-Commerce Ventures Ltd.’s Nykaa is a Mumbai-based beauty & cosmetics e-commerce marketplace; whereas PB Fintech operates Policybazaar, an online insurance marketplace.

Aside from the anticipated major listing by the state-owned Life Insurance Corporation of India (LIC), which may raise around Rs 400 billion (~$5.3 billion), India has a bunch of other IPOs slated for the next year. State Bank of India (SBI), the country’s largest bank, might raise $1 billion by selling a shareholding in its mutual fund venture through an initial public offering. More Retail Pvt., an Amazon-backed grocery chain, is also considering a $500 million initial public offering (IPO). Walmart-owned e-commerce firm Flipkart Online Services Pvt., and digital-education startup Byju’s are also preparing for their stock exchange listings.

There are some more unicorn startups which include CarDekho, Delhivery, Droom, ixigo, MobiKwik, OYO, and Pharmeasy, that are expected to make a debut in the next 12 months. For context, Gurgaon-based digital payment firm One MobiKwik Systems and Le Travenues Technology Ltd, which operates travel platform ixigo has already received market regulator SEBI’s nod to float their IPOs.

Venkataraman from Kotak Mahindra suggests a similar or slightly higher level of fundraising in 2022. However, risks such as the spread of the coronavirus’s omicron variant, increasing inflation, and interest-rate rises might impact market enthusiasm, he said. The S&P BSE Sensex has already fallen below its October 18 closing peak.