I-bankers make ₹404 cr in IPO fees till Sept

MUMBAI: On the back of a strong run in the initial public offering (IPO) market, investment bankers handling IPOS took home a total fee of ₹404 crore this year.

Investment bankers generated the fees from 24 IPOS in the nine months ended September 30 in which companies raised ₹30,850.8 crore in total, according to data from the final prospectuses filed by companies with market regulator, the Securities and Exchange Board of India (Sebi).

The total fee generated by bankers in the nine months increased only marginally from the year earlier despite more companies hitting the market with their initial share sales and larger IPO sizes.

Bankers generated ₹394.7 crore in fees in the first nine months of 2016 from 15 companies that raised ₹19,378.7 crore through IPOS. The flattish growth in fee for bankers in 2017 can be attributed to lower fees generated from larger sized IPOS.

In 2016, when ICICI Prudential Life Insurance Co Ltd became the first insurer in the country to launch an IPO, the bankers managing the share sale took home ₹90.9 crore in fees (1.5% of the issue size).

ICICI Prudential raised ₹6,056.7 crore via its IPO.

Similar IPOS in 2017 generated lower fees.

ICICI Lombard General Insurance Co. Ltd, which raised ₹5,700 crore in September, similar in size to ICICI Prudential, saw bankers make a fee of ₹54.16 crore (0.95% of issue size).

SBI Life Insurance Co Ltd, which at ₹8,386.4 crore is the largest IPO so far this year, resulted in even lower fee generation.

Bankers to the SBI Life issue took home ₹18 crore in fees (0.21% of the issue size).

Overall fee generation in 2017, both value and percentage wise, was also dragged down by other issuances such as D-mart parent Avenue Supermart Ltd and those of state-owned companies Cochin Shipyard Ltd and Housing and Urban Development Corp. Ltd, all of which generated less than 0.5% in fees for the bankers.

As a result, average fee percentage in 2017 fell to 1.31% per issue, lower than the 2% average in 2016, data shows.

To be sure, the final quarter of 2017 is expected to witness intense fund-raising action in the IPO market, with several large issuances such as General Insurance Corp of India Ltd, New India Assurance Ltd and HDFC Standard Life Insurance Ltd looking to launch their respective share sales before the end of the year.