‘QIPs to lead fundraising activities’
“We expect high-growth companies and a few private equity (PE)-backed firms to tap into the capital market with public issues,” says GOPAL AGRAWAL, co-head, investment banking, Edelweiss Securities.
In an interview with Ashley Coutinho, he says qualified institutional placements (QIPs) will lead capital-raising activities this year, led by infrastructure and financial services firms. Edited excerpts:
How do you see the IPO market this year?
Four to five IPO launches are planned this quarter. Performances of these IPOs after listing shall be a good indicator of the appetite in the market. We expect scaled and high-growth firms and a few PE-backed ones to go the IPO way. Some of the sectors looking for IPOs are small finance banks, insurance, and speciality chemicals.
How do you see the activity in terms of QIPs and buybacks?
There was slowdown in fundraising activities closer to the elections. However, we expect companies to raise long-term capital and plan future capital expenditure in the later part of the financial year. We expect QIPs to lead the capital-raising activities, with infrastructure and financial services firms cornering the lion’s share. For now, we have seen a lot of companies keeping their plans on hold after the recent budgetary announcement.
Where do you see M&As, going forward?
We believe M&As will remain high on the agenda in sectors such as financial services, IT/ITeS, infrastructure, and consumer. In infrastructure and financial services, it will be dictated by the stress in balance sheets, while in IT/ITeS and consumer, it will be because of consolidation in the fragmented subsectors. The other big theme where momentum remains strong is on PE buyouts. We believe in the buyout space.
PE players will pose very strong competition to the strategic players.
How do you see infra as a sector in terms of deal activity and investments?
Investments in infrastructure have been on the rise in the last few years. Most of the action is in road, renewable, and transmission sectors. An emerging trend is the entry of large investors preferring platform deals vis-à-vis singleasset transactions. Infrastructure investment trusts (InvITs) are increasingly becoming popular and a lot of new pools of capital are investing in InvITs. We have been quite active in the infra space, with maximum deal closures by any advisors in the space.
Will patient, longterm capital via sovereign and pension funds continue to find its way into India?
We do expect the trend to continue. Pension and sovereign funds typically have large pools of capital to deploy. Compared to their own standards of investment, this is just the start.
Domestic i-banks have done well in the past few years. What are your plans for this year?
Edelweiss investment banking has consistently remained on top of the league table in capital markets for IPOs and QIPs. Our strategy this year is to grow our advisory share in sectors in which the maximum action is.