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MUMBAI : SBI Capital Markets Ltd (SBICAP) has traditionally been seen as an investment bank riding on business from the government and its parent State Bank of India (SBI). In an interview with Mint, its chief executive officer Arun Mehta said that while its equity and debt capital market divisions were not as prominent in the market as its advisory and structured finance businesses, the company has been able to change that. Only 5-10% of the revenues used to come from equity and debt capital market sides, but this has increased to almost 30% in FY21. Edited excerpts:

How has the company fared in the face of covid-19?

Last year, despite the macro challenges created by the pandemic, we had a standalone profit of 273 crore as against 215 crore in FY20. On a consolidated basis, profit in FY21 was 527 crore as against 334 crore in FY20. There is significant growth in both standalone as well as group performance. In addition to the above, we had some windfall on the Yes Bank side where shares that were sold earned us 400 crore post tax.

What is your strategy for growing the overall business?

On the business side, we have project advisory and structured finance (PA&SF) on one side and investment banking, namely equity capital market (ECM) and debt capital market (DCM) on the other. What was happening earlier was that while we are a full-service investment bank, our presence in the ECM and DCM parts was not as prominent in the market as compared with advisory and structured finance. Last year, we could change that very substantially. Teams recruited from the market for ECM were given a clear mandate to get business from the private sector and to increase the number of private sector mandates to at least 50% of the total mandates. In DCM also, we revisited the structure and separated the origination and sales by creating one additional senior level position. It did wonders for us. In earlier years, 90-95% of our revenues used to come from PA&SF, while the rest came from ECM and DCM. Last year, almost 30% revenues came from ECM and DCM despite PA&SF also growing steadily.

What is your vision for SBICAP and what changes do you wish to see here?

There are certain things that need to be done here. We want to grow our ECM and DCM in a manner wherein they become at least 30-35% of our business and we rank in the top two or three in both the segments. We want to be among the top three in DCM and among the top two players in ECM in the country. In PA&SF, we have always been the number one player and now want to bring in more and more M&A to grow further. There are several opportunities in the market right now like the National Infrastructure Pipeline and the National Monetization Pipeline. Suddenly, companies like us are at the centre stage and can look forward to very busy times ahead. We have an enviable pipeline. We have a host of active assignments for project funding advisory. We have syndication mandates worth more than 88,000 crore across oil and gas, transportation, metals and mining. We also have around 50 signed mandates aggregating to a substantial fee potential for ECM and the pipeline of pitches also remain very strong. This year has been the year of initial public offerings (IPOs) and that has helped, too.

Could you give us an update on the SWAMIH Fund and its performance?

The SWAMIH Fund is being managed by SBICAP Ventures Limited. We started somewhere in December 2019 and setting it up was a challenge that we enjoyed addressing in SBICAP and in SBICAP Ventures Limited. The fund was just one part of it and we needed to get our act together in terms of setting up the team, systems and processes, risk management policies, investment committee and human resource policies.

Everything was done in record time. The handover of the first project of SWAMIH, CCI Rivali Park in Kandivali, Mumbai, was completed on 13 May. As on date, 87 projects have received final approval that will lead to the completion of 57,000 houses with a sanction commitment of about 8,600 crore. Ano-ther 142 projects have received preliminary approval, which will lead to the completion of 78,000 homes with a sanction commitment of about 13,000 crore.

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