Investment banking fees plunge 34 pc in Q1 to USD 194.5 mn: Report

Despite a record year for primary share issues, investment banking activities declined in the first quarter of the year, pulling down their fees by almost 34 per cent to USD 194.5 million and making it the lowest start to a year since 2016, according to a report. However, the ECM (equity capital markets) underwriting fees reached a three-year high of USD 63.8 million, growing 7.2 per cent over the same period in 2020, according to the data collated by Refinitiv, which is owned by LSEG (London Stock Exchange Group).
According to the report, at USD 194.5 million, the fee collected by I-bankers is the lowest since 2016 when it stood at USD 127.4 million. On an annualised basis, this was 33.7 per cent down from the Q1 of 2020, the report said.

The biggest drop was loan syndication fees that more than halved (down 50.5 per cent) to USD 44.7 million, followed by M&A advisory fees which plunged 47 per cent to USD 33.1 million and DCM (debt capital market) underwriting fees that fell 34.9 per cent to USD 53.0 million.

SBI Caps took the top spot in overall investment banking fee league table with 13.8 per cent wallet share, collecting USD 26.9 million.

In terms of M&As fees, Morgan Stanley topped the league handling M&As worth USD 5 billion or 18.9 per cent market share, followed by Goldman Sachs and BofA Securities with 15.2 per cent and 14.7 per cent market share, respectively.

ICICI Bank led the ranking for ECM underwriting, handling USD 927.5 million in related proceeds and 12.7 per cent market share, followed by BofA Securities and Axis Bank with 12.2 per cent and 11.3 per cent market share.

M&As reached USD 26.6 billion in the first quarter and were flat, while deal count fell 20.8 per cent year-on.

There were six deals above USD 1 billion during the first quarter, with a cumulative total of USD 15.9 billion, compared to USD 10.4 billion from four deals last year.

Domestic M&As inched up 1 per cent to USD 15.8 billion, primarily led by Piramal Capital & Housing Finance's bid to acquire Dewan Housing Finance through the bankruptcy process for a total USD 4.711 billion, making it the largest deal so far this year.

In-bound M&As grew 21 per cent to USD 8.3 billion. The US-based companies were the most active foreign acquirers totalling USD 5.1 billion deals, or 62.3 per cent of all inbound M&As.

On the other hand outbound M&As fell 40.6 per cent to USD 1.8 billion, despite a 17.1 per cent increase in volume.

Britain was the most targeted nation in terms of value by Indian companies with six deals worth USD 1.5 billion, or 79 per cent of all outbound deals, while the US saw the most number of acquisitions with 11 deals worth USD 196.5 million.

Equity capital markets (ECM) raised USD 7.3 billion in Q1, up 13.4 per cent, which was the highest start to a year since 2018 when it stood at USD 8.8 billion.

Follow-on offerings accounted for 67.9 per cent of ECM proceeds, raising USD 5.0 billion, up 16.5 per cent.

Initial public offerings totalled USD 2.3 billion, a 98.7 per cent jump in proceeds, making it the highest first quarter since 2018, led by IRFC's USD 635.50 million IPO in January.

On the debt capital market, bond offerings started slow and amounted to USD22.9 billion, down 10.5 per cent and making it the lowest first quarter since 2018 when it was USD18.4 billion.

Axis Bank topped the ranking for bonds underwriting worth USD 2.5 billion from 30 issues or 11 per cent market share.