The downturn in secondary markets has deterred large issuers from tapping the capital markets, resulting in a pent-up demand.
Another reason for the association between small issues and boutique investment banks is that most of the big names in i-banking have hiked their fees 3-4 per cent compared to 2 per cent earlier. According to sources, smaller investment banks are charging 1.5 per cent, sometimes even lesser than that.
While 2008 has seen a general slowdown and withering of sentiment in the primary market, it is boom time for boutique i-banks.
"We expect our fee-based income from IPOs to increase this year compared to last year," said investment banking head of a niche i-bank, which recently completed a small public issue.
Out of the 20 public issues this year, more than 10 raised less than Rs 100 crore. Companies such as Aishwarya Telecom and Sitashree Food Products, which mopped up Rs 14 crore and Rs 31.5 crore, respectively from the market had been attractively priced and hence attracted a lot of investor attention.
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Experts say that it is difficult to convince investors in a bearish market, but it seems smaller i-banks are doing their job tactfully.
If subscription levels of some of these IPOs are anything to reckon, most of them were decently subscribed by more than 3 times.