Deals Buzz: Why India is a breakout IPO performer amid global slump

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Central Depository Services files draft papers for IPO

Central Depository Services (India) Ltd (CDSL) on Tuesday filed its draft initial public offering (IPO) prospectus with the markets regulator Securities and Exchange Board of India (Sebi).

According to the draft red herring prospectus (DRHP), the IPO will be a pure offer for sale by existing shareholders of CDSL—BSE Ltd, State Bank of India Ltd, Bank of Baroda Ltd and The Calcutta Stock Exchange.

Mint reported in August that CDSL was planning to go public to help existing shareholders sell their stakes.

The existing shareholders will sell a total of 35.16 million shares, the DRHP shows.

BSE, SBI, Bank of Baroda and The Calcutta Stock Exchange together hold 65.65% stake in CDSL, with BSE alone holding 50%.

India a rare bright spot amid slump in global IPO activity

Even as global initial public offering (IPO) activity witnessed a fall in both volume and value terms in 2016, India was a standout performer, according to consulting firm EY’s Global IPO Trends report.

Globally, the number of IPOs in 2016 fell 16% year-on-year to 1,055 and capital raised was down 33% to $132.5 billion, the report said, adding that heightened political and economic uncertainty had affected activity in the IPO market.

However, India recorded a 38% increase in deal volume and a 79% surge in proceeds raised, driven by stronger economic fundamentals and a pro-business political regime.

On Indian stock exchanges, 83 IPOs raised $3.8 billion (approximately Rs25,800 crore) in 2016, according to the EY report.

India’s stock markets ranked as the seventh most active in terms of number of deals globally as the country’s IPO activity hit a six-year high.

Religare Enterprises to merge 11 units with itself in restructuring

The board of Religare Enterprises Ltd (REL) has approved a plan to merge 11 of its subsidiaries with REL, the company said in a filing to the stock exchanges on Tuesday.

The plan is part of an effort by the group, run by brothers Malvinder Singh and Shivinder Singh, to consolidate its businesses and maintain an India-focused strategy.

The units to be merged are: Religare Securities Ltd (excluding its broking business), Religare Commodity Broking Pvt. Ltd, RGAM Investment Advisors Pvt. Ltd, Religare Venture Capital Ltd, Religare Arts Investment Management Ltd, Religare Capital Finance Ltd, RGAM Capital India Ltd, Religare Investment Advisors Ltd, Religare Support Services Ltd, Religare Arts Initiative Ltd and Religare Capital Markets (India) Ltd.

Investment banking revenue falls 11% to $440 million in 2016

Investment banks in 2016 collectively earned $440 million in fees, 11% less than the $495 million they garnered the previous year, Dealogic data showed.

Over the past six years, the peak was $868 million in 2011.

Foreign investment banks dominated dealmaking in 2016, with only three local banks—State Bank of India, Axis Bank and ICICI Bank Ltd—making it to the list of the top 10 dealmakers by fees earned.

Foreign banks that made it to the top 10 were JPMorgan Chase & Co., Bank of America-Merrill Lynch, Barclays Plc., Credit Suisse AG, Citigroup Inc., Standard Chartered Plc. and Deutsche Bank AG.

The top 10 banks took home $235 million in fees in 2016, or 53% of the total. In 2015, the corresponding figure was 48.2%.

Cement deals dominate top five M&A deals in 2016

Fuelled by a consolidation wave and rising confidence in the country’s economic growth prospects, merger and acquisition (M&A) activity increased to $69.75 billion across 1,195 announced transactions in 2016, beating the previous record of $66.96 billion seen in 2007, when dealmaking was at its peak, according to data compiled by Thomson Reuters.

The year witnessed major transactions such as the sale of Essar Oil Ltd, merger of Reliance Communications Ltd and Aircel Ltd, and acquisition of Max Financial Services Ltd’s life insurance business by HDFC Standard Life Insurance.

Of the top five largest deals, two were in the cements space.

JSW Energy board approves raising up to Rs750 crore

JSW Energy has received approval from its board to raise funds up to Rs750 crore through issuance of redeemable non-convertible debentures by way of private placement.

The issue proceeds would be used for the general corporate purposes, business operations, working capital and repayment of existing debt, the Sajjan Jindal-led company said in a BSE filing.

The board has also authorised the Finance Committee to decide on all matters relating to the proposed issuance of the debentures, including finalisation and approval of the detailed terms of issue, it added.

JSW Energy has diversified businesses in carbon steel, power, mining, industrial gases, port facilities, cement and information technology sectors.