I-bankers got just 0.5% for D-Mart IPO

Avenue Supermarts, which operates the D-Mart retail chain, paid ~9.43 crore — just 0.5 per cent of the issue size — to the eight investment banks that managed the Initial Public Offering (IPO), shows the company's final offer document filed with the market regulator this week.

Typically, investment banks charge between 1.5 per cent and three per cent to manage private-sector IPOs. The average fee charged for the previous 10 big IPOs is around two per cent.

The eight investment banks that handled the D-Mart IPO are Kotak Mahindra Capital Company, Axis Capital, Edelweiss Financial Services, HDFC Bank, ICICI Securities, Inga Capital, JM Financial Institutional Securities, Motilal Oswal Investment Advisors, and SBI Capital Markets.

Sources said the bulk of the ~9.43crore fees was paid to Kotak Mahindra Capital, which acted as the main lead banker, while the remaining seven were paid equally.

"Investment banks were told about the low fees beforehand. Despite that, they agreed to take up the mandate because of the goodwill associated with the promoter and the D-Mart brand," said an investment banker privy to the development.

D-Mart is promoted by legendary investor Radhakishan Damani, someone who knows the stock markets inside out.

The company raised ~1,870 crore from the IPO, which was subscribed more than 100 times.

Including investment bankers' fees, the total expense for the D-Mart offering was ~32.6 crore. Broker commission, advertising and marketing, listing fees, processing fees are some of the IPOrelated expenses.