Red-hot IPO market removes i-banking charges

Papers filed by consumer technology companies with the Securities and Exchange Board of India (SEBI) showed that the IPOs of five of these companies – Paytm, Zomato, Nykaa, PolicyBazaar and Cartrade – have earned collective fee income. 940 crores (about $126 million) for banks.

Paytm transaction alone. achieved record high fee income of 323.9 crore for banks. of paytm The 18,300 crore IPO was the biggest ever IPO in the country.

Zomato’s IPO launched 229.1 crore, while Policybazaar paid 168.4 crores and Nykaa and Cartrade paid 148.3 crore and 70.7 crores respectively.

Collectively, these companies have raised 41,732 crore from share sale.

Technology companies outnumber large non-tech firms in fee generation.

investment banks earned 97.34 crore from Gland Pharma 6,479.5 crore IPO, 90.85 crore from ICICI Prudential Life Insurance 6,056.79 crore IPO in 2016, and 85.25 cr from Blackstone Backed Gold BLW Precision Forgings Ltd. 5,550 crore IPO.

Other large issuances like SBI Cards and Payment Services Limited Banks’ earnings in 10,340.79 crore IPO 48.34 crore, while HDFC Life Insurance Company Limited’s He got the IPO of 8,695 crores 35.61 crores.

“The fee income from tech IPO deals is definitely higher than non-tech IPOs, and that is because this is the first batch of tech IPOs. Hence, the efforts that go into these IPOs are very different and more like preparing prospectus and Working with the regulator to get approval for the deal as well as wider marketing to get investors in overseas markets at large,” said an investment banker on condition of anonymity.

“Generally, fees are less than 2% in large IPOs, but in most of these technical IPOs, we have seen fees in the range of 2-3%,” the banker said.

Of the five deals in the consumer technology space, only Paytm charges less than 2% (1.8%), but the share sale size is much higher than the other four deals, resulting in comparatively higher fee income.

To be sure, the fees from the initial public offering are not distributed equally among all the banks working on a transaction as such transactions involving multiple bankers have a two-tier payment model.

So-called ‘lead-left merchant banks’ and global coordinators earn more than others listed in the syndicate as book-running lead managers.

The Indian primary market has brightened the fortunes of investment banks this year.

Data from financial market tracker Refinitiv shows fee income from initial public offerings rose 7.4% to $241.4 million in the first nine months of 2021, while overall investment banking fees fell 5.4% to $761.5 million.