 "merger")
Indian investment banking activities generated $515.2 million during the first half of 2023, a 17 per cent increase compared to the first half period last year and the highest semi-annual start year since 2021 ($524.1 million). Completed M&A advisory fees fell 26 per cent year-on-year (YoY) and totaled $141.4 million, according to Investment Banking 1H 2023 report by Refinitiv.
ECM underwriting fees reached $90.9 million, almost unchanged from a year ago. DCM underwriting fees totaled $137.6 million, a 72 per cent increase from a year ago. While syndicated lending fees grew 87 per cent from the comparable period last year and generated $145.3 million in the first half of 2023. Axis Bank took the top position for overall investment banking fees in India with a total of $34 million, accounting for 6.6 per cent wallet share of India’s investment banking fee pool.
Merger and acquisition activity
India-involvement announced M&A activity fell to a seven-year low and stood at $32.6 billion in the first half of 2023, down 74.8 per cent from a year ago, but the number of announced deals saw a 5.2 per cent YoY growth. Target India M&A activity reached $28.7 billion, down 76.5 per cent from a year ago and the lowest first-half period by value since 2016.
"Deal-making involving India witnessed a record number of deals during the first half period of this year with more than 1,400 transactions announced to date. The overall value of Indian M&A activity reached $32.6 billion, down 75 per cent compared to a year ago due to the lack of mega deals above $5 billion, unlike last year when the HDFC Bank and HDFC Ltd’s $60 billion record-breaking deal in India was announced", said Elaine Tan, Senior Analyst at Refinitiv.
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Domestic M&A activity totaled $16.7 billion, down 83.2 per cent from the same period in 2022. Inbound M&A fell 46.3 per cent from a year ago and totaled $12 billion. Outbound M&A activity reached $3.7 billion, down 38.5 per cent year-on-year with the United States as the most targeted nation with 30.8 per cent market share.
The majority of the deal-making activity involving India targeted the Financials sector which totaled $7.5 billion, down 88.9 per cent in value from a year ago, which accounted for 23.1 per cent market share. Industrials totaled $5.2 billion, down 11.6 per cent from a year ago with 16 per cent market share.
Technology, which saw the highest number of deals announced during the first half of 2023, captured 15.5 per cent market share with $5 billion worth of deals, down 73.1 per cent year-on-year. Private equity-backed M&A in India amounted to $8.2 billion, down 56.1 per cent from a year ago, and the lowest first-half period by value since 2020.
‘’Given the global macroeconomic uncertainty, deal makers are exercising a degree of conservatism, translating into fewer large deals. No deals bigger than $1 billion involving India have been announced during the first quarter of 2023, but we have seen at least four deals within the $1 billion range announced in the second quarter. The anticipated merger of IDFC First Bank with IDFC Ltd could prop up India’s M&A activity for the rest of the year.’’ Tan added.
Bond market
Primary bond offerings from India-domiciled issuers raised $51.4 billion during the first half of 2023, a 66 per cent increase in proceeds compared to the same period last year, making it the highest semiannual period since records began in 1980.
Indian issuers from the Financials sector captured 81.3 per cent market share which amounted to $41.8 billion, up 136.2 per cent in proceeds compared to last year. Industrials followed behind with a 7 per cent market share worth $3.6 billion, a 103 per cent increase from a year ago.
ICICI Bank Ltd topped the ranking for India-issued bonds underwriting, with related proceeds of $9 billion and accounted for 17.5 per cent market share.
Equity markets
India equity capital markets (ECM) raised $10.3 billion in the first half of 2023, up 13.5 per cent compared to a year ago, making it the highest first-half period by proceeds since 2021. The number of ECM offerings hit a five-year high and saw 143 issuances (combined Initial public offerings and follow-on offerings, up 31.2 per cent year-on-year.
Initial public offerings (IPO) from Indian issuers raised $1.4 billion, down 73.4 per cent from a year ago, but the number of IPOs saw a 25 per cent year-on-year increase. Follow-on offerings, which accounted for 87 per cent of India’s overall ECM proceeds, raised $9 billion, up 127.2 per cent from a year ago, while the number of follow-on offerings grew 38.8 per cent year-on-year.
ECM Issuance from India’s Industrials sector accounted for the majority of the nation’s ECM activity with 23.9 per cent market share worth $2.5 billion, a significant increase from a year ago ($696.1 million). Financials captured 21.8 per cent market share followed by Materials and Retail with 13.2 per cent and 11.5 per cent market share, respectively.
