Investment bankers make USD 761 mn in advisory fees during Jan-Sept; lowest in 3 years: Report

Despite deal making scaling past a three-year-high level during the first nine months of the year at over USD 90 billion, investment bankers' advisory fees fell to USD 761.5 million during the period, the lowest in three years, according to a report.

SBI Caps tops the underwriting fees league table with 8.6 per cent wallet share or USD 65.7 million, followed by Morgan Stanley (6.3 per cent with USD 48.1 million) and JPMorgan (6.2 per cent pie with USD 47.5 million) during the first nine months of the year 2021, according to a report by financial markets data provider Refinitiv, is an entity owned by the London Stock Exchange Group.

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As per the report, Axis Bank got USD 46.7 million or 6.1 per cent share, Goldman Sachs stood at the fourth slot with USD 46.7 million or 6.1 per cent each of the market pie, and ICICI Bank (USD 40.4 million, 5.3 per cent) comes at the fifth slot.

Wall Street brokerage BofA Securities comes sixth with USD 33.5 million for a 4.4 per cent deal share, followed by Kotak Mahindra Bank (USD 32.8 million, 4.3 per cent), Citi (USD 29.1 million, 3.8 per cent), and Avendus Capital taking home USD 23.3 million for a 3.1 per cent deal share and take the 10th slot, according to the report.

Within the ECM league table, ICICI Bank leads with USD 2.5 billion in related proceeds and 11.3 per cent of the market share, followed by JPMorgan and Axis Bank capturing 9.5 per cent and 8.8 per cent pie, respectively.

While deal making totalled USD 90.4 billion in the first nine months of 2021, highest in three years, closing 35.1 per cent more deals over the same period a year ago, deal making fees fell 5.4 per cent to USD 719.3 million, making it the lowest first-nine-month period since 2018 when it was USD 719.3 million, according to the report.

Of the USD 761.5 million generated in investment banking fees during the first nine months of the year, underwriting fees from the equity capital markets led the fee collection with USD 241.4 million (given the flurry of IPOs that flooded he market collecting over USD9.2 billion so far this year), the report said.

It added that it is still 7.5 per cent less than the same period in 2020, followed by debt capital market underwriting fees totalling USD 127.4 million, which was down 23.8 per cent to the lowest first nine months period since 2018.

Completed deal advisory fees grew 17 per cent to USD 241.8 million, while syndicated lending fees declined 11.6 per cent to USD 151 million.

The i-banking fees are down as merchant bankers are charging less from their clients as the deal making process is mostly online.

Another reason for lower fees is the higher average deal value size of USD 105 million, which was up 14.4 per cent year-on-year with 17 deals topping the USD 1-billion mark and totalling USD 38.8 billion, compared to 12 deals above USD1 billion worth a total of USD30.1 billion y-o-y.

Also, the biggest deal of the year was not an merger and acquisition (M&A) but through the NCLT route, wherein Piramal Capital paid USD 4.7 billion (Rs 34,250 crore) for Dewan Housing Finance.

The equity capital markets saw only USD 22.1 billion being raised during the period, down 32.7 per cent, despite a 65.6 per cent growth in the number of offerings as deals were done in smaller value.

Similarly, the number of IPOs also grew 160.7 per cent year-on-year at over USD 92 billion and over 50 per cent the IPOs were in the third quarter, which saw 34 issues worth USD 5.1 billion, led by Zomato's USD 1.3 billion issue in July being the largest issue so far this year.