IPO Pipeline Sees Repeat Names as JM Financial, IIFL Capital Dominate League Tables

Market Debut Mandate Book Dominated by a Few Banks

As 146 companies prepare to make their public market debut, the mandate book is showing a disproportionate spread. A handful of banks are dominating the majority of deals, with JM Financial, IIFL Capital Services, and Motilal Oswal Investment Advisors leading the pack by a significant margin.

According to data on upcoming issues that have received approval from the market regulator Securities and Exchange Board of India, almost 30% of the issues have tapped JM Financial to act as their banker, while Motilal Oswal Investment Advisors and IIFL Capital Services appear in 36 and 42 issues respectively.

The concentration is stark, with issuers gravitating towards familiar banks. The rising prevalence of foreign investment banks has added to the increasing competition. On average, issues now have between two to three bankers, while two of the issues approved by SEBI, Hero Fincorp and Hella Infra Market, have up to eight bankers.

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The number of active investment banks has increased over the past three to four years, adding to the competition, according to Pranav Haldea, MD of PRIME Database. This has led to a trend of smaller i-banks wishing to be the sole banker for an issue. Of the 146 firms, 41 have chosen to go with a single bank for the issue, which tend to be smaller- or mid-sized banks.

The number of banks on a mandate does not impact the overall fee paid out by the issuer, which is typically a percentage of the overall issue amount, according to Haldea. Therefore, adding more bankers may dilute the fees paid per bank, rather than adding to the firm's IPO costs.

In cases where issuers choose to go with a single bank for the issue, they often prefer a leaner structure with just one banker handling end-to-end execution for the IPO. This allows smaller investment banks an opportunity to take on lead roles in an issue, instead of being part of a large syndicate of banks. Large foreign banks are often part of syndicates to assist with international distribution, finding global, marquee investors to invest in the issue, while the domestic i-banks focus on the pricing, book-building, and allocation processes. Of the 146 issues, no issue that has a single banker is a foreign banker.

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