Investment bankers from top domestic firms could take home 100-150 per cent of annual salary as bonuses, on average — much higher than last year when payouts ranged from 30 per cent to 40 per cent.
The financial year 2023-24 saw robust deal activity through initial public offerings, qualified institutional placements, and block deals, with a fee collection estimated to be over ₹2,000 crore. Total equity fundraising stood at ₹1.86 lakh crore in 2023-24, 142 per cent higher than FY23.
This follows a lacklustre year of fundraising marred by a series of interest rate hikes by central banks worldwide, geopolitical tensions and market volatility.
Indian corporates raised Rs 61,915 crore through 76 main board IPOs in 2023-24, 19 per cent higher than the Rs 52,116 crore mobilised by 37 IPOs in 2022-23, according to primedatabase.com. The amount raised through qualified institutional placements stood at Rs 78,089 crore, more than seven times the amount raised the year before. Bulk and block deals totalled Rs 5.25 lakh crore, 55 per cent higher than the previous fiscal.
“The pie has grown bigger,” said Munish Aggarwal, Managing Director Head – Equity Capital Markets, Equirus. “Equity fundraising activity was buoyant, with a sizeable number of block deals apart from IPOs last year. The deal pipeline remains robust and every organisation knows that they will have to give a decent payout to retain talent.”
Another senior banker, on condition of anonymity, said: “The bonuses could range from 100 per cent to 150 per cent of annual salaries depending on performance. The healthy pipeline of IPOs and QIPs will also have a bearing on the payouts.”
The bonuses are directly correlated to the fees collected. The overall fee pool, in turn, is directly related to the amount of deal activity and the volume of funds being raised. Investment bankers earned Rs 1,685 crore in fees from IPOs alone.
Banks pocket 2-3 per cent as fees, on average, for managing IPOs, and 1.5-2 per cent for handling QIPs. They can earn up to 1.5 per cent on block deals --
25-50 bps for liquid counters and 100-150 bps for illiquid names.
The IPO pipeline remains strong. Nineteen companies proposing to raise nearly ₹25,000 crore hold SEBI approval, while another 37 companies looking to raise about ₹45,000 crore are awaiting SEBI approval. Out of these 56 companies, nine are new-age technology companies with an estimated issue size of ₹21,000 crore.
Large investment banks will look to hire mid-level and senior bankers given the churn seen in the past few months, said industry officials.
Atul Mehra was recently appointed as the MD & CEO of Axis Capital. Salil Pitale, Co-Chief Executive Officer, has quit the firm. Pratik Loonker, the head of equity capital market at ICICI Securities, has quit and is said to be joining Axis Capital, according to reports.
Notably, according to reports, US banking regulators are planning to revive a proposal that would require big banks to defer compensation for executives and take back more of their bonuses if losses pile up.