SBI Caps focused on equity issues, M&A in 2010

SBI Caps focused on equity issues, M&A in 2010

Mumbai: SBI Capital Markets, the investment banking unit of the country’s top lender, State Bank of India, has a pipeline of 20 equity issues that it will be managing over the next 3-4 months, its CEO said.

“SBI Caps was a little quiet last year as the equity market was not very active. Now that we are seeing a potential in the market, we are fully geared up for that and we have a big pipeline ahead of us," managing director and chief executive S Vishvanathan told Reuters in an interview late on Tuesday.

He estimated there could be issuances worth Rs1,000 billion ($22.5 billion) in the Indian market in 2010. In 2009, Indian firms raised about $19 billion in new equity.

“We have about 20 issues which are going to come up in next 3-4 months," Vishvanathan said.

Morgan Stanley and J P Morgan are the top two investment banks in India for handling both equity issues and M&As.

In 2009, SBI Caps handled five major equity issues that raised 136.5 billion rupees ($3.1 billion). This included issues state-owned NHPC Ltd, which raised $1.25 billion, and Adani Power, which raised $630 million.

SBI Caps is one of the managers to Standard Chartered’s India listing which is set to raise up to $750 million and Jindal Power’s $1.8 billion initial share sale.

It is also banking on the nearly $9 billion worth of disinvestments planned by the government in the fiscal year which started on 1 April.

Vishvanathan said SBI Caps had hired about 100 people in the last 3-4 months, boosting the total tally to about 600.

M&A Player

The investment bank is also aiming to play a larger role in mergers and acquisitions in 2010 as it intends to leverage its parent’s banking relationship with Indian companies.

SBI Caps, which, with $29.5 billion, topped the league tables in Asia Pacific (ex-Japan) in syndicated loan arrangements in 2009, has been a minor player in M&As so far.

“We are not a major player in that but this year our focus is going to be in that area in a major way," Vishvanathan said.

He said the company’s ability to do M&As was high, as by virtue of being a loan arranger it had a relationship with every large corporate in the country and could also leverage its parent’s banking relationship.

On the debt side the investment bank, which with $6.6 billion is the No.2 loan syndicator in Asia Pacific in the first three months of 2010, is eyeing more deals to come its way riding on the Indian government’s thrust on infrastructure.

Last month the finance minister urged a doubling of infrastructure spending to $1 trillion in the five years to 2016-17.

“About half of this will be in the form of debt. We are preparing ourselves for some of these funds to meet the requirements of the market," Vishvanathan said.

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