According to data from Thomson Reuters, investment banking fees in India have declined 37.8 per cent on year-on-year basis. Analysts attribute this fall to a slump in global markets, leading to a slowdown in deal activity and mergers and acquisitions.
Domestic markets have plummeted 35 per cent from their peak this year. As a result, investors and issuers have lost interest in the IPO market.
Lots of companies have withdrawn or postponed their IPOs this year for the same reason. Private equity activity has also witnessed a deceleration after some of the PIPE deals (private equity in public enterprise) turned sour.
While investment banking fees have fallen 19 per cent in the Asia-Pacific region, the fall is more in India because the market is high beta. India's cross-border volume of M&A deals has declined by 51.1 per cent from the same period last year.
However, loan syndication witnessed a 66 per cent rise compared to a 69.4 per cent fall in equity capital market activity. State Bank of India topped the overall i-banking league table with 31 deals amounting to $31.3 million followed by Merrill Lynch with 18 deals worth $26.3 million.
Energy, power and telecom were the main contributors to the revenues with 50 and 18 deals respectively. While energy sector saw the much coveted IPO of Reliance Power, there were some important deals in telecom such as the Idea-Spice merger and stake sale in Aditya Birla telecom to Providence equity partners.
Kotak Mahindra Bank topped the equity capital market mobilisation chart, which includes follow-on offerings, IPOs and convertibles.
In M&As, Merrill Lynch was leading with 11 deals worth $26.1 million. Currently, it has a market share of 8.5 per cent in M&As.
"In this downturn, clients are not willing to give a premium. The deal pipeline has become very shallow. If the volatility continues, the revenues could see a sharp reversal from last year and sooner than later it will start pinching our pockets, " admitted vice-president of a leading investment bank.
