Investec looks to expand investment banking, lending operations in India
Investec also wants to beef up its lending business, which today is largely focused on offshore loans
Mumbai: Investec is looking to expand its investment banking services in India and add a lending business to its operations in the country, a top company executive said.
Johannesburg and London-listed Investec, which started merchant banking and brokerage operations in India in 2012, has so far focused on investment banking advisory to early stage technology and renewable energy companies, leverage financing focused largely on financial sponsors to help them acquire companies and aircraft leasing.
Since starting its India operations, the bank has executed close to 50 transactions across all its business verticals. The company has 70 employees in the country.
Investec is now looking to build its advisory practice in other sectors such as banking, financial services and insurance sector (BFSI), consumer and healthcare. Investec had hired a team from domestic financial services group Motilal Oswal to begin its advisory business.
“When we started our advisory business, we decided to focus on the early stage businesses that were coming through. Today, the early stage vertical has become a market leading business for us. In the early years, we did deals for companies such as Quikr, Pepperfry and BigBasket. Later, we also started focusing on renewables which has become a significant market participant and where we have done deals for the likes of Greenko and Mytrah, the latter which we helped delist from the London bourses,” said Ajeeth Narayan, India head at Investec.
“We have a couple of transactions on the BFSI side and we are going to grow the healthcare, consumer verticals too... We are doing some transactions in these sectors, but we need to bulk up more,” he added.
Investec also wants to beef up its lending business, which today is largely focused on offshore loans. In the last three years, through loans and bonds, the bank has financed around $4 billion for various corporates.
Investec has helped finance several private equity investments such as Baring Private Equity Asia’s buyout of IT services firm Hexaware Technologies Ltd and Blackstone’s acquisition of BPO firm Intelenet.
“We are looking at a rupee lending platform. We will start off with our own balance sheet but as we scale, to be capital-efficient, we will seek external sources,” said Narayan.
The bank also intends to scale up its equity capital markets (ECM) practice which it started a couple of years ago.
“We are still a new kid on the block, but we are hungry and you will see some clear wins there. We recently ran a London IPO through our India team for a microfinance lender called ASA International, which has businesses in India and other countries. You have to go through some period of time with your analysts, settle down the brokerage, before you start doing transactions. So, you will see us very much in the ECM market very soon,” said Narayan.
Last year, Investec was one of the bankers on the IPO of roads company Bharat Road Networks Ltd, which raised ₹600 crore through its share sale.
According to Narayan, unlike other foreign banks operating in India, which work largely on transactions coming through the network, Investec wants to build a domestic client focused business.
“Our motto is that we want to be domestically relevant. In terms of client focus, we want to be like the domestic shops, but we are also internationally networked. The decisions are all taken by the Indian team but we are able to leverage on our internal network as and when required. So, we are able to keep our cost structure much lower than international shops, but at the same time, we are able to offer the smaller companies our international network,” he said.