Investment banks see fees drop to 4-year low

CHENNAI: Year 2022 was a tough one for investment banking as total fees generated in India fell 16% year on year, making it the lowest annual tally since 2018, data from financial markets tracker Refinitiv showed.

India investment banking activities generated $989 million in 2022, compared to around $1. 2 billion in 2021 and $1. 1 billion in 2020. Fees collected by investment bankers in 2022 from activities tied to equity markets more than halved from 2021 as the number of initial public offerings (IPOs), especially in tech, slumped. Fees for ECMs (equity capital markets) underwriting stood at $203 million, down 54% from year ago.

Analysts note that a rise in tech IPOs in 2021, including that of Zomato and Paytm, led to a spike in banker fees in that year, and in comparison, 2022 only saw the IPO of tech logistics startup Delhivery. Refinitiv data showed that IPOs from Indian issuers raised $7. 6 billion in 2022, a 55. 3% decline from a year ago, but the number of IPOs saw a 23. 8% year-on-year increase.

DCM (debt capital markets) underwriting fees stood at $172 million — rising just 1% from previous year. Fees for syndicated lending declined 14% from the comparable period last year generating $187. 6 million in 2022.

In a silver lining, with India-involvement M&A activity reaching an all-time high, M&A advisory fees increased 21% year on year and totalled $426. 7 million. Overall India M&A stood at $170. 6 billion in 2022, up 38. 2% from a year ago, making it the highest annual period since the research firm’s tracker in 1980. Number of announced deals grew 14. 7% YoY.

“As companies continue to digitise their businesses and accelerate innovation, tech-related deals will continue to be a key theme next year. Energy transition and the renewable space could be another growth area to watch out for as companies focus on transitioning to green assets, clean energy, and renewables,” Elaine Tan, senior analyst at Refinitiv, said.

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