Investment bankers make $761 mn in advisory fees during Jan-Sept; lowest in 3 years: Report

Despite deal making scaling past a three-year-high level during the first nine months of the year at over $90 billion, investment bankers' advisory fees fell to $761.5 million during the period, the lowest in three years, according to a report.

SBI Caps tops the underwriting fees league table with 8.6 per cent wallet share or $65.7 million, followed by Morgan Stanley (6.3 per cent with $48.1 million) and JPMorgan (6.2 per cent pie with $47.5 million) during the first nine months of the year 2021, according to a report by financial markets data provider Refinitiv, is an entity owned by the London Stock Exchange Group.

As per the report, Axis Bank got $46.7 million or 6.1 per cent share, Goldman Sachs stood at the fourth slot with $46.7 million or 6.1 per cent each of the market pie, and ICICI Bank ($40.4 million, 5.3 per cent) comes at the fifth slot.

Wall Street brokerage BofA Securities comes sixth with $33.5 million for a 4.4 per cent deal share, followed by Kotak Mahindra Bank ($32.8 million, 4.3 per cent), Citi ($29.1 million, 3.8 per cent), and Avendus Capital taking home $23.3 million for a 3.1 per cent deal share and take the 10th slot, according to the report.

Within the ECM league table, ICICI Bank leads with $2.5 billion in related proceeds and 11.3 per cent of the market share, followed by JPMorgan and Axis Bank capturing 9.5 per cent and 8.8 per cent pie, respectively.

While deal making totalled $90.4 billion in the first nine months of 2021, highest in three years, closing 35.1 per cent more deals over the same period a year ago, deal making fees fell 5.4 per cent to $719.3 million, making it the lowest first-nine-month period since 2018 when it was $719.3 million, according to the report.

Of the $761.5 million generated in investment banking fees during the first nine months of the year, underwriting fees from the equity capital markets led the fee collection with $241.4 million (given the flurry of IPOs that flooded he market collecting over $9.2 billion so far this year), the report said.

It added that it is still 7.5 per cent less than the same period in 2020, followed by debt capital market underwriting fees totalling $127.4 million, which was down 23.8 per cent to the lowest first nine months period since 2018.

Completed deal advisory fees grew 17 per cent to $241.8 million, while syndicated lending fees declined 11.6 per cent to $151 million.

The i-banking fees are down as merchant bankers are charging less from their clients as the deal making process is mostly online.

Another reason for lower fees is the higher average deal value size of $105 million, which was up 14.4 per cent year-on-year with 17 deals topping the $1-billion mark and totalling $38.8 billion, compared to 12 deals above $1 billion worth a total of $30.1 billion y-o-y.

Also, the biggest deal of the year was not an merger and acquisition (M&A) but through the NCLT route, wherein Piramal Capital paid $4.7 billion (Rs 34,250 crore) for Dewan Housing Finance.

The equity capital markets saw only $22.1 billion being raised during the period, down 32.7 per cent, despite a 65.6 per cent growth in the number of offerings as deals were done in smaller value.

Similarly, the number of IPOs also grew 160.7 per cent year-on-year at over $92 billion and over 50 per cent the IPOs were in the third quarter, which saw 34 issues worth $5.1 billion, led by Zomato's $1.3 billion issue in July being the largest issue so far this year.

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