MC EXCLUSIVE Aim to be among Top 3 players in India, says UBS' Abhishek Joshi

There will always be windows within markets when activity is higher or lower for several reasons such as external political factors and market volatility. Overall, we remain very confident that, given what we are seeing in the background, there is a very strong pipeline of activity, which should hopefully come to market in the next 12 - 18 months.

If you just go by the estimates of IPOs filed that is $30 billion plus of listing, though timings will depend on SEBI approvals, market (conditions) and various things. This year should be almost as good, if not better, on IPOs than the last year.

Then there is the QIP and block activity, which has continued to be quite robust. Conversations that we have with domestic and international investors makes us very comfortable that the interest is here to stay and the market should continue to see very robust activity. Fundamentally, we remain very bullish on the IPO market.

In 2024, India was the second largest IPO market. Right now, we seem to be trailing on volumes as well.

One key characteristic of IPOs in India, over the past three– four years is that majority of the capital that has been raised has been secondary. What that means is that there is no desperate need for capital for that business to grow and that if the deal doesn't consume, the expansion plans or whatever are going to suffer. Therefore, this typically gives the vendors or the issuers a bit more flexibility in terms of deciding when to go (public) and if the perceived valuation or whatever investor quality or any other factor is not up to their desired expectation, they have the ability to take a step back.

I think that is what we are seeing right now. People are choosy. That is a sign of a developing market. These small dislocations and being slightly behind from last year's number can change very quickly. If you look at every high quality paper that has come to market, you will see FIIs subscribing to that in different volumes and in different sectors. Also, the fact that constantly you see new filings is a sign of interest among corporates to tap the market.

What is your take on valuations. Some of the recent IPOs have revealed stark disconnect between unlisted and IPO prices?

I think there is a lot of exuberance in these private markets due to heavy retail and HNI participation, which needs to be threaded with caution. There are several such instances where private markets get ahead of themselves on expectations.

When IPOs are priced, it is done taking into account feedback from a large number of institutional investors, both domestic and international and that's when we come to an agreement on price. It's done taking into account everyone's views. It is a discovered price.

Every IPO could be priced very differently had it been one year ago or one year hence, because markets change.

In an IPO, you are dealing with a company where the track record is limited and only to the extent that it's put in the prospectus. Sometimes people (in the unlisted segment) tend to ignore some of the fundamentals and markets tend to run ahead, without taking all of this into account.

We’ve not had big IPOs which have delivered blockbuster listing pop either yet?

This is a function of market sentiment and a lot of times in India, the (listing) pop is driven quite a bit by retail participation. We have not had that level of retail participation, so far, this year. But, I think it is sensible too if you were to ask me for a different perspective.

Post the IPO, if the pricing runs up extremely fast or falls down extremely fast, then there is some issue with the pricing. It was not accurately priced and there was some error in the fundamental pricing.

A well-priced IPO is something that leaves something on the table for incoming investors. It (the stock) goes up or down depending on markets and reality. An investor coming into any stock wants long-term sustainability. If (someone’s) looking for listing pop, you're speculating and not an investor.

It’s been a year of operations post-Credit Suisse acquisition by UBS. It was domestic investments banks ruling the league tables last year. UBS didn’t have much representation despite investment banking being a strong area for CS.

We have a criteria for what we define as our market. To give you an example, we wouldn't be competing for, let's say, a $25 million or a $50 million deal. But within our addressable market, we are very clear that we want to be within the top three over the next three–five years. We have invested heavily, on the banking and markets sides. What is important is, once we have identified our clients, we want to be partners with them in their journey. For example, if a long-term client of ours wants to do something which isn't normally in our preferred target deal zone, we will still do it because we want to continue to add value to our clients.

Lastly, we believe India is a market that has continued to grow and we are very bullish on it. You are right that in terms of last year's league table we weren’t there because we went through our own integration. But if you look at the investments we have made in the country, both in terms of people and technology, we have no doubt that across products whether IPOs, blocks or QIPs over the medium term, we will be in that top three league table position in our market for sure.

This combination of UBS and CS powers us up more than 2x; it's two of the largest European firms combined into one. Culturally very similar. UBS has been historically very strong in China and in Australia, and that continues. Credit Suisse was stronger in India, in Korea. Now UBS has got those markets as well Southeast Asia. We believe this is a sustainable position in India.