SBICAP and IPOs
SBICAP expects some 40 IPOs in 2017-18:
SBI Capital Markets (SBICAP) is India’s largest domestic investment bank, offering the entire gamut of investment banking and corporate advisory services, encompassing project advisory and loan syndication, structured debt placement, capital markets, mergers and acquisitions, private equity and stressed assets resolution. Founded in 1986, it is a wholly owned subsidiary and the investment banking arm of the State Bank of India.
SBICAP had raised close to `200 billion through IPOs in 2016-17 against `18.16 billion in FY2015-16. IPOs have crossed `100 billion in the first 6 months of 2017. June 2017 has seen IPOs worth more than `53 billion. In the fast-paced stock market conditions, the IPO of GTPL Hathway, which offers cable TV and broadband services, was oversubscribed 1.53 times, against an IPO target of `485 crore. Another IPO for `1912 crore of AU Small Finance Bank got 53.50 times subscribed on the final day.
According to Narayanan Sadanandan, executive vice president, SBICAP has already raised close to `20 billion till date this year. “The major business of the company is project advisory, structured finance and syndication. Hence, around 10% of the company’s income is contributed by capital market activities,” he adds.
Similarly, the `525 crore IPO of Central Depository Services (CDSL) has been oversubscribed 170 times and state-owned Hudco saw nearly 80 times subscription in the first quarter of the current FY.
Says Narayanan Sadanandan: “We have completed IPOs of CDSL and HUDCO this year. We launched 7 IPOs last year though we had filed 13 DRHPs.”
For 2016-17, SBICAP was associated with the IPOs of RBL Bank, ICICI Prudential Life Insurance, L&T Technology Services, HPL Electric & Power, BSE, GVR Infra Projects etc. In 2015-16 it was associated with the IPOs of Navkar Corporation, Prabhat Dairy, Infibeam Incorporation, and Precision Camshafts.
SBICAP has been instrumental in helping the Pune Municipal Corporation (PMC) recently to create history by becoming the first civic body in 14 years to raise money through municipal bonds. The issue was subscribed 6 times.
PMC has raised `200 crore as the first tranche of a `2300-crore fund raising program to fund a 24x7 water supply project for Pune city.The bond issue was a part of a borrowing plan of PMC that will be spread over 5 years. SBICAP was the lead arranger for the issue.
ROLES AS THE BASIS
In the case of certain IPOs, some financial institutions are regarded as global coordinators and others as Book Running Lead Managers for the same offering. Narayanan Sadanandan opines: “If the client wants to tier the BRLMs based on the roles, you may find GCBRLMs and BRLMs in few issues.”
The SBICAP workforce is a balanced blend of experience and expertise. It has a combination of professionals, including MBAs and CAs, and experienced lateral recruits from the market. Out of the total of 285 employees, 31 are executives on deputation from the SBI and 208 are directly recruited managerial staff. As much as 80% of the direct recruits are MBAs from India’s leading business schools and 20% are chartered accountants.
SBICAP has 2 foreign subsidiaries, one in Singapore and the other in London, which looks after distribution. The institutional sales and research and retail sales are housed in its domestic subsidiary i.e. SBI Caps Securities.
TARGETS IN CURRENT FY
The market today is ripe with factors like good macro- economic conditions, reform oriented stable government, good monsoon and more than adequate liquidity. Stock market is less volatile and there is adequate fund flow from FIIs. Narayanan Sadanandan estimates that nearly 40 IPOs will hit the market in the current financial year.
SBI Capital Markets has been already mandated for 20 IPOs this year. “Given the conducive market, we are hopeful of churning out the best performance this year,” says Narayanan Sadanandan.
Narayanan Sadanandan is hopeful of churning out the best performance this year in the given conducive market