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Kotak Mahindra Capital Company, the investment banking arm of the Kotak Mahindra Bank, has managed to more-than-double its market share in the $100-million-plus deal bracket to 15 per cent from 4 per cent in 2011.
Managing Director and CEO T.V. Raghunath, said: “There were 35 deals in 2013 above $100 million, and of that, we have managed to corner 15 per cent.”
Position in tact “Equities saw about Rs 54,000 crore of issuances this year, with about 148 deals aided by the SEBI-mandated norm of dilution of promoter to 75 per cent, which kicked off in June. We have a pretty good mix of them contributing to that volume, but if we strip off the deals related to the SEBI norm, the volumes were not great this year, particularly on the equities side.”
“It has been a good year in terms of performance (volumes), particularly in the primary issue segment — IPOs and FPOs. We have retained our dominant position. We had a 50 per cent market share. We did 16 transactions totalling Rs 27,000 crore and were reasonably good on procurement of all these,” he said.
Skewed market On the overall slowdown in the deal industry, both in terms of volumes and the number of deals as well as its impact on the company, Raghunath said: “We have had a reasonably healthy share of reduced volumes because of our product capabilities, and we do hope, depending on the macro and political formations, we will be in a good position for the subsequent year.”
In 2013, the M&A volume dropped to $27 billion from $38 billion in the previous year, even as the number of deals dropped to around 520 from 700-odd deals. “This year, despite market volume dropping, the value of deals we have announced is about $1.6 billion in about 12 transactions, with about five (being) more than $100-million and nine of them more than $50 million,” he said.
“Of the 700 deals concluded this year, 60-65 were in the $100-million bracket. At the last count, we have half that number of investment banks in the country. So, it is an extremely skewed market.
“But these 60-65 deals account for about 80 per cent of the value of the deals. Clearly, that’s the segment one would want to play in,” he added.
As part of its investment strategy and organisational structure, Kotak Investment Banking has decided to focus on the $50-million deal space and play to a broader corporate India, doing transactions “by India and doing transactions of India”.
Kotak Mahindra Capital Company had reported an annual net profit of Rs 52 crore in 2010-11 which dwindled to Rs 6 crore in 2011-12 and subsequently recovered mildly at Rs 17 crore for the fiscal ended 2013. “As far as profitability goes, the kind of net profit levels seen in 2010-11 are a thing of the past now, with a change in market dynamics. We will not be able to hit those levels in present times.”
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