I-bankers rake in big moolah as IPOs flood the market
They have earned Rs 1,800 crore in IPO fees since the beginning of 2020; Rs 1,013 crore so far this year
Investment bankers have raked in Rs 1,800 crore in IPO fees since the beginning of 2020. A slew of initial public offerings (IPOs), worth Rs 62,600 crore have been launched this year alone. The number of IPOs is the highest since 2017. I-bankers have earned Rs 1,013 crore so far this year, the Business Standard reported quoting from a report by Refinitiv, a provider of financial market data and infrastructure.
Logic behind the numbers
“IPO fees are directly correlated to deal activity and volumes. The value of issuances so far this year is the second highest in any given year, and the fees earned are therefore commensurately higher,” the news report quoted Pranav Haldea, managing director, Prime Database, as saying.
The fact that PSU offers were fewer this year has also helped shore up overall fees. Though offers are typically large, PSUs offer lower fees to the I-bankers. Only two of them, IRFC and RailTel Corporation of India, launched their IPOs this year.
Giving another perspective Pranjal Srivastava, partner (ECM), Centrum Capital, told the daily that new-age companies have close relation with bankers and it would not be too surprising if are ready to shell out higher fees to the bankers when they hit the market.
He further told the newspaper that there has been several large size IPOs- Rs 1,000 crore and more – in 2021 and I-bankers can make good money on these, although the charges, percentage-wise, could be lower than in smaller offerings.
Interestingly, the Rs ,1800-crore earned by investment bankers in India constitutes just 1% of the global fee of $13.7 billion from IPOs, according to the report.
More IPOs on the anvil
The report said Zomato’s Rs 9375-crore IPO fetched Rs 229 crore for investment bankers. I-bankers could be seeing an even greater rise in their income, with IPOs from new-age companies such as Paytm, Nykaa, Ixigo, MobiKwik, and PB Fintech, expected to hit the market in the coming months.
This excludes the IPO offering of the LIC expected to hit the market next year and touted to be the largest IPO ever in India.
Market experts quoted in the report said that the fees charged by bankers typically vary from 2-3% of the size of the issue. The percentage of fees per issue this year, however, has stood at about 1.6 per% because of the larger average issue size, they added.