ICICI arm 4th on M&A list of global investment banks

Is in the fourth position, with deals worth $4.2 billion

Through two years investment banks have largely downsized their teams. But ICICI Securities has strengthened operations. Now, it is on a par with global banks Citi and Bank of America Merrill Lynch in the mergers and acquisitions (M&A) league table.

For the first half of this year, I Sec, as ICICI Securities is popularly known, is fourth in Bloomberg's M&A league table, with $4.2 billion worth of deals. This is largely due to its advisory role in Ranbaxy Laboratories' $4-billion merger with Sun Pharmaceuticals. For 2013 and 2012, I Sec was 20th and 27th, respectively, on the list.

"We have prepared well in the last two years, when there was a lull in the market," says Anup Bagchi, managing director and chief executive of I Sec.

In 2013, M&A activity dropped to $62 billion from $165 billion in 2012, as policy paralysis crippled India's economic growth. For the first half of this year, M&A activity rose to $54 billion. And, the momentum is expected to continue, as the new government works on fuelling economic growth.
 

Until April 2012, I Sec, part of domestic financial behemoth ICICI Group, was largely in the business of capital markets and private equity advisory. Till then, the group's M&A advisory team was under ICICI Bank. As the group decided to keep all its investment banking business under one roof, it shifted its 12-member M&A advisory team to I Sec.

 

Subsequently, I Sec hired additional members. The strength of the team rose to about 70, bringing expertise for various sectors. "We have improved the composition of the team to bring in more sector focus. This, along with tighter coordination with group relationships, is showing results," says Bagchi. The I Sec origination team, responsible for bringing new business, has tripled the number of its senior members (executive vice-president and senior vice-president levels) from four to 12. For coverage, there is a dedicated internal origination team, which works closely with ICICI Bank's corporate finance team.

The investment bank's major deals in the first half of this year include Thomas Cook Group's acquisition of Sterling Holiday Resorts, Zuari Fertilisers' stake purchase in Mangalore Chemicals and Fertilizers and the acquisition of Milestone Home Finance by Mannappuram Finance. These deals are valued in the range of $30-50 million each.

"One big deal can really swing one's position in the league table," says Ajay Saraf, executive director at ICICI Securities. "So, while we do regular bread-and-butter deals, we also keep our eyes on billion-dollar ones," he says.

I Sec's strength is largely in domestic deals. Its capability in high-value cross-border deals is limited. In October 2013, it tied up with Tokyo Stock Exchange-listed GCA Savvian to garner a slice of the growing India-Japan M&A pie.