Moneycontrol PRO
Check Credit Score
Check Credit Score
HomeNewsBusiness

With strong pipeline of deals, Bank of America expects 'busy' H2 this year

The Charlotte, North Carolina-headquartered bank expects the deal street to be driven by both consolidation in the sectors impacted by the pandemic and financial institutions raising growth capital.

July 20, 2020 / 12:54 PM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Global investment banking major Bank of America (BofA), which stood second in the India deal street ranking in the first half, is bullish on the remaining six months with a strong pipeline of deals, despite the COVID-19 pandemic hitting business sentiment.

The Charlotte, North Carolina-headquartered bank expects the deal street to be driven by both consolidation in the sectors impacted by the pandemic and financial institutions raising growth capital.

Raj Balakrishnan, the head of India investment banking at BofA says, the pandemic is unlike any other previous crises, which were business crises.

"A company that was being run perfectly well till February may not be viable now for no fault of the management, as its business may be hit due to the lockdowns. Further, the same company may be perfectly fine once lockdown is over and normalcy returns as long as it has sufficient liquidity to sail through the crisis," Balakrishnan told PTI, expressing confidence in the broader business recovery.

That is why, he said, raising capital is now the key to help emerge as a winner.

Thanks to Reliance Industries selling over a quarter of its stake in its subsidiary Jio Platforms, the deal street was vibrant clocking nearly $44 billion in H1 of 2020, up 14.5 percent YoY.

Between late April and June, Reliance sold nearly 25 percent in Jio Platforms to 10 investors, including Facebook, which snapped up 9.99 percent for over Rs 43,000 crore. Then it sold 15 percent more, collectively raising Rs 1.2 lakh crore including through the largest rights issue of Rs 53,124 crore in June.

Others who lapped up minority stake in Jio for $15.27 billion include Silver Lake Partners, General Atlantic, KKR and others. The selling spree continued in July with Google picking up 7.7 percent for over Rs 33,700 crore.

According to industry tracker Mergermarket, BofA stood second in the i-banking league table with deals worth $6.7 billion in the first half, capturing 17.6 percent market share. Morgan Stanley topped the list with $13 billion across nine deals.

BofA was one of the bookrunners of the largest rights issue by Reliance worth Rs 53,124 crore in June. The bank also exclusively advised Facebook for its stake-buy in Jio.

BofA also executed block deals for Standard Life Aberdeen (in HDFC Life and HDFC AMC) and for Blackstone in Embassy Office Parks REIT.

SBI Cards IPO, the largest initial share listing in nearly a decade, and Avenue Supermart's (DMart) QIP and OFS are some of the other big deals executed by BofA this year.

And deals continue to be worked on.

"We have a strong pipeline of deals and we are confident, the second half will be equally busy," Balakrishnan said.

Companies hit by the pandemic would try to sell down their non-core businesses, and it would be another opportunity for investment bankers, he added.

Balakrishnan has multiple reasons for being optimistic on the deals front.

"A lot of minority stake sale is happening across India Inc and we will see some sales driven by portfolio choice as well. You will also see quite some activity in the e-commerce space where consolidation is likely," he added.

In June alone, BofA handled six market transactions raising over $8.5 billion for clients. The deals included Standard Life Aberdeen selling 5.6 percent in HDFC AMC for $378 million through OFS, the RIL rights issue of $7.1 bullion, and Blackstone selling stake in Embassy Office Parks REIT for $500 million among others.

"We were the busiest i-banker on the street amid a challenging and volatile market backdrop. From the landmark $7.1 billion RIL rights issuance, which is the largest ever capital market transaction in the country to $18 million Andhra Paper OFS — we were there adding the most relevant investor colour and helping our clients access liquidity," he said.

According to Mergermarket, Morgan Stanley and BofA have picked nearly half of the $43.5-billion deals in H1, through just 11 of the 72 deals.

But in terms of volume, the period saw 24.7 percent fewer deals at 183 as against 243 YoY.

Morgan Stanley led the league table completing nine deals worth $13.53 billion.

Disclaimer: “Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.”

PTI
first published: Jul 20, 2020 12:40 pm

Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!

Advisory Alert: It has come to our attention that certain individuals are representing themselves as affiliates of Moneycontrol and soliciting funds on the false promise of assured returns on their investments. We wish to reiterate that Moneycontrol does not solicit funds from investors and neither does it promise any assured returns. In case you are approached by anyone making such claims, please write to us at grievanceofficer@nw18.com or call on 02268882347