Despite a massive jump in M&As, IPOs, i-banking fees dip 10% to $438 million in H1

IPO | (PC-Shutterstock)

Notwithstanding a massive spike in equity capital markets deals and a 37.4 per cent jump in M&As in H1 of 2021 at $55.1 billion, investment banking fees fell 10 per cent to $438 million, making it the lowest first half since 2016, industry data showed. Overall, SBI Caps has taken the top spot in the investment banking fee league tables with 9.5 per cent wallet share and $41.6 million in fees, according to Refinitiv, an LSG group entity, on Monday.

Mergers and acquisitions (M&As) reached a three-year high of $55.1 billion in the first half, up 37.4 per cent y-o-y in the first half, Of this, cross-border M&As amounted to $21.73 billion across 210 deals, up from $16.02 billion across 195 deals, according to Refinitiv. Investment banking activities generated $437.9 million in the first half of 2021, a 10 per cent dip y-o-y, making it the lowest first half period since 2016 when it was USD 263.6 million, according to the Refinitiv data.

ALSO READ: Primary market action this week: 2 IPOs to hit the Street for Rs 2,500 crore cumulative fund raising

Equity capital markets underwriting fees reached more than a decadal high with $126 million, a 25.2 per cent increase as IPOs grossed up $3.9 billion, more than three times over the amount raised last year. On the other hand, debt capital market underwriting fees were down 34.5 per cent to $84.4 million, the lowest first half period since 2018. Second quarter volume this year grew 6.8 per cent in value and 13.5 per cent by number of announced deals compared to the first quarter of 2021, pushing overall M&As activity to reach a three-year high with $55.1 billion in the first half, a 37.4 per cent increase in value from a year ago, Elaine Tan of Refinitiv said.

Domestic companies saw record levels of IPO issuances during the first half totalling $3.9 billion, more than triple y-o-y and a healthy IPO pipeline is expected to retain buoyancy for the rest of the year, including the upcoming IPO from Zomato, Tan said. Completed M&A advisory fees also fell 14.7 per cent from a year ago and totalled $108 million. Syndicated lending fees declined 8.3 per cent to $119.5 million. SBI Caps took the top spot in the investment banking fee league tables with 9.5 per cent wallet share and $41.6 million in fees.

Average M&A value stood at $101 million, up 12.2 per cent year-on-year, as 11 deals above $1 billion were announced during the first half, with a cumulative total of $24.7 billion, compared to six deals above $1 billion worth a total of $17.1 billion last year. M&As stood at $50.6 billion, up 47.7 per cent. Domestic M&As rose 57.9 per cent to $28.8 billion, led by Piramal Capital acquiring DHFL for $4.711 billion.

Inbound M&As grew 36.1 per cent from a year ago and reached $21.8 billion, the highest first half period since 2018. American companies were the most active acquirers with $11 billion worth of deals, accounting for 50.3 per cent share, while outbound M&As totalled $3.1 billion, down 1.8 per cent despite a 21.3 per cent increase in number of deals.

Majority of the deals involving India targeted the financials sector totalling $11.2 billion, up 75.3 per cent, or 20.3 per cent share. Energy & power accounted for 19.6 per cent share after a 22.3 per cent growth in value to $10.8 billion. High technology and materials captured 16.1 per cent and 10 per cent market share, respectively with the former seeing a 293.4 per cent growth to $8.8 billion, and the latter seeing 66.3 per cent more activities to $5.5 billion.

BofA Securities takes the top slot in M&A league tables, with $7.4 billion in related deal value or 13.5 per cent market share. Equity capital markets raised $13.4 billion, a 36.1 per cent decline in proceeds from the first half of 2020, despite a 91.7 per cent growth in number of offerings as deals were done in smaller value.

Follow-on offerings, accounting for 68.7 per cent of overall ECM proceeds, raised $9.2 billion, down 51 per cent, but the number of follow-on offerings grew 71 per cent. IPOs totalling $3.9 billion is the highest first half period since 2008 when it was $4.3 billion. Number of IPOs also grew 131.3 per cent year-on-year.

ECM issuances from the financials sector accounted for majority of the the activity with 49.9 per cent share worth $6.7 billion, up 63.1 per cent. JP Morgan leads ECM underwriting fees with $1.4 billion in related proceeds and 10.6 per cent market share. BofA Securities and ICICI Securities come second and third, with 10.4 per cent and 9.4 per cent share, respectively.