I-bankers earn Rs404 crore in IPO fees in Jan­uary-septem­ber

Mint Asia ST - - News - BY S WARAJ SI NGH D HANJAL IPO fee-jan to Sep snap­shot


the back of a strong run in the ini­tial pub­lic of­fer­ing (IPO) mar­ket, in­vest­ment bankers han­dling IPOS took home a to­tal fee of Rs404 crore this year.

In­vest­ment bankers gen­er­ated the fees from 24 IPOS in the nine months ended 30 Septem­ber in which com­pa­nies raised Rs30,850.8 crore in to­tal, ac­cord­ing to data from the fi­nal prospec­tuses filed by com­pa­nies with 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 Rs394.7 crore in fees in the first nine months of 2016 from 15 com­pa­nies that raised Rs19,378.7 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 Rs90.9 crore in fees (1.5% of the is­sue size).

ICICI Pru­den­tial raised Rs6,056.7 crore through its IPO. Sim­i­lar IPOS in 2017 gen­er­ated lower fees. ICICI Lom­bard Gen­eral In­sur­ance Co. Ltd, which raised Rs5,700 crore in Septem­ber, sim­i­lar in size to ICICI Pru­den­tial, saw bankers make a fee of Rs54.16 crore (0.95% of is­sue size).

SBI Life In­sur­ance Co. Ltd, which at Rs8,386.4 crore is the largest IPO so far this year, re­sulted in even lower fee gen­er­a­tion.

Bankers to the SBI Life is­sue took home Rs18 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.

On 5 Oc­to­ber, con­sult­ing firm EY said in a re­port that IPO ac­tiv­ity in the coun­try is headed for a record year in 2017, as an in­creased num­ber of is­suers aim to take ad­van­tage of a stock mar­ket rally and in­vestor de­mand.

The re­port noted that the IPO out­look re­mains buoy­ant de­spite the volatil­ity re­sult­ing from the in­tro­duc­tion of the goods and ser­vices tax.

This ac­tiv­ity is bound to en­sure that bankers will take home a larger sum of fee by the time the year comes to a close.

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