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The year 2022 was a difficult one for dealmaking, especially in capital markets, as global macroeconomic woes kept Indian markets volatile and foreign investors withdrew liquidity. In an interview, Ajay Garg, founder and managing director of Equirus Capital, owned 20% by Federal Bank, spoke about the dealmaking outlook for this year and the investment banking platform’s plan to expand its asset and wealth management businesses with an investment of 750 crore over the next five years. Edited excerpts:

What is the growth plan for Equirus for the next five years? How are you building out the asset management and wealth management businesses?

Equirus is rightly placed in all its businesses to enjoy significant growth in next five years. Equirus Wealth is strategically poised to significantly scale up in the next five years as both the wealth and asset management businesses have been steadily growing for the last 5-6 years and are operationally profitable as well. We are adding a tech and digital team to increase our capabilities on the digital side as we have started HNI broking, which was missing in our overall proposition. Family office is another proposition that we intend to start to cater to the segment at which Equirus parent entity has been operating over the last 15 years. At Equirus Wealth, we keep client at the centre of all decision-making and all solutions that we develop are to take care of client needs. This strategy has helped us cross 5,000 crore AUM across wealth and asset management and over the next five years, we would want to increase this penetration into partner banks by increasing our location network and RM (relationship manager) footprint. Asset management would be focussed on creating and managing high-quality alpha-generating portfolio; we would want to piggy on the alpha that we have generated for our clients in our flagship fund Equirus Long Horizon and replicating the same in a more diversified portfolio. We would also wish to add debt PMS and AIFs as a part of asset management offering, which shall in turn increase our overall proposition.

How much capital do you plan to invest in the platform for these plans? Will you look at going public to raise the funds or will you look at private equity investors?

We plan to invest around 750 crore in all our businesses put together. There is specific deployment for our digital wealth business and NBFC business to help our wealth platform. We are also adding the direct equities options for our wealth platform. With Gift City presence, we are seeking to further our AMC vertical. Our core business of investment banking and institutional equities are looking to broaden and strengthen the capability. Besides internal accruals, we will supplement the same with the right external raising to implement the above plans.

Federal Bank is a minority investor in Equirus. Will they be investing more capital in Equirus to fund these growth plans?

Since 2018, Federal Bank has been a key investor and partner of Equirus. Post the initial investment, the bank has participated in our rights issue and has always invested in the past.

Will capital market deals such as IPOs and QIPs see a good run in 2023 or do you see a repeat of 2022?

2022 had been sluggish because of the external headwinds. Not just India, but the entire world has suffered. However, 2023 is a year of hope as we expect the headwinds to fade and therefore, capital market deals should revive. Needless to say, the backlog of 2022 itself will provide the much-needed boost. Furthermore, as we will see return of foreign capital and revival of equity markets, deals should improve. Notably, the attractiveness of Indian companies, the confidence in Indian markets remains intact. What is needed is the return of risk in the global arena which will happen with the abatement of the headwinds. Furthermore, it is imperative to note that not just the private sector, but government is also “eagerly" awaiting the momentum with a sizable divestment programme, the success of which is imperative to long term fiscal discipline and consolidation path.

Yes, tightening liquidity not just locally but globally means the easy money is no longer available. However, that only reaffirms that only those companies with strong business fundamentals will get access to the market. Overall, we could see activity pick up with the pace and quantum increasing with Q2/Q3 onwards.

How are you planning to grow the advisory side of the investment banking business?

Over the years, we have built strong expertise in each of industry verticals with deal track record in new-age tech services, road divestments, auto ancillary, speciality chemicals, healthcare, and financial services as well as fintech. We continue to strengthen these track records and broaden our domain and deal track record. With the broad platform, Equirus is the only middle market bank which can help clients discover true value across private equity market, strategic market, and public market. Through this product-agnostic capability, we are able to have a stronger client-oriented approach to deliver the best solution relevant for the client situation rather than force-fit solution at our product capability.

ABOUT THE AUTHOR
Swaraj Singh Dhanjal
" Based in Mumbai, Swaraj Singh Dhanjal is responsible for Mint’s corporate news coverage. For the past eight years he has been writing on the biggest deals in private equity, venture capital, IPO market and corporate mergers and acquisitions. An engineer and an MBA, he started his journalism career in 2014 with Mint. "
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