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The country’s stock market remained flat in the first half of 2015 (H1) but equity issuances climbed 2.7 times over the same period last year, $15.3 billion (Rs 87,800 crore) in listed domestic companies as compared to $5.6 bn (Rs 36,000 crore) in H1 of 2014.
The jump was on the back of big-ticket equity issuances in companies, including Coal India and Sun Pharmaceutical Industries. The $3.6 bn (Rs 22,600 crore) offer for sale in the state-owned miner was the country’s largest-ever equity offering, while the $3.2 bn stake sale by Daiichi Sankyo in Sun Pharma was the largest-ever block transaction domestically.
Goldman Sachs, which managed both deals, has taken a lead in the equity capital market (ECM) league table for India. "Last year's election created a great deal of momentum in the markets and we have sought to build on that by promoting India's investment thesis and corporate champions to global investors,” said P V Krishna, managing director and head of ECM, Goldman Sachs in India, which handled transactions worth $4.2 bn during the first half of 2015.
The US-based investment bank, which ranked fourth in the first half of last year, also handled HDFC Bank’s $1.6 bn fund raising through part-qualified institutional placement (QIP) and part-American depository receipts in February, and a nearly $500 million QIP of YES Bank.
Thanks to the large-ticket transactions, Goldman cornered an unprecedented 27.7 per cent market share during the first half of 2015. Bank of America Merrill Lynch has second place on the league table with nine per cent market share and total transaction size of $1.38 bn, shows data compiled by Thomson Reuters.
At third place is Credit Suisse, followed by domestic banks JM Financial and Kotak Mahindra Bank in fourth and fifth, respectively.
Equity issuances in the first half were largely dominated by follow-on offerings in listed firms. Meanwhile, Initial Public Offer (IPO) activity, although it saw a sharp jump on a year-on-year basis, was relatively muted on an absolute basis. In H1, $586 million was raised by IPOs, compared to only $81.7 mn during the same period last year. Most of the IPOs so far this year have been mid-size or small-size issues.
Investment bankers expect the strong momentum during the first half to sustain. “There has been good fund-raising activity this quarter. The outlook looks promising and there is strong investor appetite for good quality issuances. The market will continue to provide windows of opportunity to raise capital, across a variety of sectors,” said Gesu Kaushal, executive director, Kotak Investment Banking
Krishna of Goldman says momentum remains strong and “ECM activity will continue to be robust over the next 12 months in the form of capital raises, selldowns and exits, all of which will help to create growth for India".
