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Neha Kaushik
Anil Sasi

Revenues from India increase 23% in 2006

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New Delhi Feb. 4 With a surge in the number of global merger and acquisition (M&A) deals involving Indian companies, revenues of investment banks from India have shot up 23 per cent in 2006 to $413 million.

While the sheer quantum of M&A deals in recent years has resulted in a number of investment banks treading a path to India, analysts said that the growing number of high-value deals such as the recent Tata-Corus deal is stoking further interest in the Indian investment banking space.

Further, there are a number of big-ticket deals in the pipeline such as the stake sale in Hutchison Essar.

ABN Amro led the pack of investment banks in India in 2006, accounting for the highest volume of M&A transactions.

Incidentally, ABN Amro, along with Deutsche Bank and Credit Suisse Group, advised Tata Steel on the Corus deal.

According to Grant Thornton, the total number of deals struck in 2006 was estimated at 782 ($28.2 billion), compared to 467 ($18.3 billion) in 2005. Of these, 480 were M&A deals and 302 private equity ones.

The revenue growth of Indian investment banking firms, while leading over the more developed markets, pales before the growth seen in China.

During 2006, revenues of investment banking firms in China shot up by 67 per cent to $1.3 billion from $792 million in 2005, according to data compiled by Dealogic.

Analysts attribute the slower growth in India (vis-à-vis China) to higher competition in the Indian market, resulting in lower fees. However, this could change in the backdrop of growing number of larger deals involving Indian firms.

The increased action in the investment banking space has also resulted in a talent crunch, with skilled professionals in the domain hard to come by.

"Many of the foreign investment banks are recruiting from local entities. This has resulted in the salaries of investment bankers in India jumping manifold. Further, the clutch of private equity firms entering/expanding in the country are battling for the same talent," said an official from an Indian investment banking firm. With firms such as Lehman Brothers, UBS, Goldman Sachs and the investment banking divisions of ABN Amro and Citigroup expanding their teams in India, the demand for experienced investment bankers is outstripping supply, the official added.

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