Mumbai-based investment bank Equirus Capital Pvt. Ltd, a closely held unlisted investment banking firm founded in 2007, is planning a major transformation. From being an investment banker for mid-size companies, the firm is now looking to tap into large wholesale and retail clients. It plans to expand its products portfolio to debt and equity capital markets, structured finance, capital market products and advisory services. All this will be done post a 26 per cent stake sale to Kochi-based private lender Federal Bank. So far, the firm has completed over 135 transactions worth $3.2 billion. BusinessLine spoke with Ajit Deshmukh, Head of Investment Banking of Equirus, on its future plans and outlook for the M&A and PE market. Edited excerpts.

What was the rationale behind the Federal Bank deal? What is the deal size?

The whole idea of the commonality of transaction is the thought process of building up the whole admired middle market financial services from and I guess we help the bank bring equity products that we have built in the last ten years in M&A PE advisory, structured finance and capital market. We have just started the portfolio management services and plan to leverage upon the bank debt capability for our client. It helps both the organisation broaden their product offering and also from geographical perspective, we have a limited presence in the South and we would benefit it from the depth of the relationship the bank has across the geography and West Asia.

We are not disclosing the deal value at this moment. We will use the money across our existing businesses and setting up derivative business, distribution and couple of other business lines which under work.

How is the investment banking business looking in general and what kind of targets you have for FY19?

Capital markets and investment banking businesses are pretty good right now in terms of where the markets are. Equity performances has been good there are a lot of issue in pipeline, which we are working on with a good FY19 visibility.

Any major deals in pipeline? What sectors interests you?

We see a healthy pipeline going forward across the sectors this year. Deal activity will mainly be driven by liquidity, capital market transactions and M&A. We see good traction to come from cross border M&A in IT, domestic investment in infrastructure, capital raise in BFSI and consolidation and M&A in the life sciences sector. The deal activity is likely to be concentrated in the small and mid-size bracket, well positioned for Equirus.

How big is the cross-border M&A advisory space in India? What could be the growth this year?

Cross border M&A advisory has a big potential. Of the total M&A activity of $62 billion in 2017, cross border was about $34.3 billion and is expected to grow further this year with favourable FDI policies and enactment of new laws.

On the cross-border front, which are the sector are looking attractive in terms of deal activity?

IT sector has seen phenomenal growth in cross border transactions over the years and have led the M&A space. Foreign firms are focussing on companies in the digital space to gain access to skilled talent and a burgeoning market. Target has been to acquire start-ups with niche technologies.

We believe cross border activity will mainly be in this sector. Other sectors that have been good traction is life sciences as most Indian companies today have product development and manufacturing capabilities, which are globally competitive and value-add to the incoming buyers. Also Indian companies are evaluating global partners to scale up, build a product portfolio and access larger distribution network.

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