The boom in the number of initial public offerings in India in 2021 has helped investment bankers rake in a record US$1.1 billion in advisory fees, according to a report.
In 2021, 63 companies, including many new-age startups, entered the capital market and raised a whopping 1.2 trillion rupees ($16.6 billion), dwarfing the previous record of $10.8 billion in 2017, according to a report by Refinitiv, a London Stock Exchange Group subsidiary.
The report said the $1.1 billion in fees collected through investment banking activities is 8.5% higher than 2020, and the highest since records began in 2000. The number of initial share offerings was more than double of 2020 and the proceeds were four times higher than last year.
Many of the firms that had windfalls in capital markets were new-age startups. They included online food delivery firm Zomato, which hit a market cap of 1 trillion rupees within hours of trading, and online fashion brand Nykaa, whose initial public offering was subscribed 81.7 times.
Nykaa founder Falguni Nayar, who owns a 54% stake in the company, became India’s richest self-made female billionaire. Nykaa also attained the rare distinction of becoming the first Indian unicorn to be led by a woman.
Nayar is a former investment banker who took to entrepreneurship at the age of 50.
One 97 Communications, the parent of fintech firm Paytm, offered the biggest initial share sale in India’s corporate history, but sales were below expectations. However, it was still subscribed 1.89 times.
Among investment bankers, SBI Caps took the overall top spot in investment banking fees with a 7.8% wallet share and $86.9 million in related fees, according to the report.
ICICI Bank led the equity capital market underwriting fee chart with $3.9 million in related proceeds and a 10.8% market share, followed by JP Morgan and Axis Bank which had a 10.5% and 8.6% market share respectively. Axis Bank topped the rankings in bonds, underwriting 108 issues worth $9.7 billion and had a 16.6% market share.
Overall, the equity capital markets raised $35.6 billion in 2021, down 4.3% in proceeds from 2020, despite 73.6% growth in volume as deals were done in smaller values.
The hallmark of the year was the massive retail response as the average retail applications stood at 1.43 million, in comparison to 1.27 million in 2020 and 405,000 in 2019.
With benchmark interest rates low, many first-time amateur investors flocked to the capital markets. Brokerages and lenders witnessed a flurry of Demat account openings, to trade in stock markets, and many of these investors hailed from small towns.