Professional Documents
Culture Documents
Merchant Banking 1
Merchant Banking 1
Merchant Banking 1
71
4.1
72
Table 4.1
Number of Merchant Bankers Registered with SEBI
Years
Number
1997 98
802
1998 99
415
1999-00
186
2000-01
233
2001-02
145
2002-03
124
2003-04
123
2004-05
128
2005-06
130
2006-07
152
2007-08
155
2008-09
137
role of co-lead manager/ co-manager and the advisors to the issues have been
separately dealt with in the present study
Total
Issues
Floated
Total
Amount
(Rs. Crore)
Average
Issue
Size
(Rs.
Crore)
As Lead
Managers/
BRLM
As Co- Lead
Managers/
Co- Managers
Managers/
Advisors
Total
Merchant
Banks
Involved
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
Total
62
32
65
124
19
14
35
34
102
85
91
22
685
3,061.22
7,910.74
7,673.14
6,622.90
6,422.57
5,731.57
22,144.57
25,526.41
23,675.70
24,993.37
53,219.00
3,534.00
1,90,515.19
49.37
247.21
118.04
53.41
338.00
409.39
632.70
750.77
232.11
294.04
584.82
160.64
322.34
41
14
21
34
6
6
15
20
39
37
37
18
288
23
28
37
29
18
18
11
20
2
9
4
8
207
64
42
58
63
24
24
26
40
41
46
41
26
-
Source: - Compiled from offer documents, SEBI website and Prime Directories of
relevant years.
74
4.2
75
Table 4.3
Public Equity Issue Management by Indian andForeign Merchant Banks
( Rs. in Crores)
Year
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
Total
Note: -
76
Chart 4.1
Chart 4.2
Further, the Indian merchant banks have the significant higher proportion of
total equity amount managed form 1997-98 to 2002-03 with the exception of 2001-02,
when one foreign merchant bank was able to manage a single issue of Rs. 834.02
crore. From the year 2003-04 onward, both types of merchant banks were able to
manage almost equal proportion of total resource mobilised through equity and
77
deferred equity issues. On the other hand, the foreign merchant bankers were almost
absent in the issue management activities of equity issues in 2008-09. Only one
foreign merchant banker joined Indian merchant bankers for one public issue
management.
The analysis of the table leads to the conclusion that issuer companies with
large issue size relied more on foreign merchant banks than on Indian merchant
banking companies. This was because of the vast international network of foreign
originated merchant banks as compared to Indian merchant banks.
and advisors to the equity shares. Some lesser known merchant bankers were involved
in even single issue in a year while some others were the managers for more than ten
public equity issues also.
Table 4.4 reveals the year wise number of merchant banks who acted as lead
managers/co-lead manager/advisors to different number of public equity issues. It has
been depicted in the table that total merchant banks 404 involved in the management
of equity issues during the period under review.
Of the total merchant banks involved, 227 (56.2%) lead merchant banks
managed 1-2 issues only in a year while 48 (11.9%) handled more than ten public
issues of equity share. However, majority of the merchant banks have handled less
than four public issues. In 1997-98, out of 65 merchant banks involved as managers to
the public issues, as many as 52 (80%) handled one or two issues only. Similarly 23
(57.5%) merchant banks in 1999-2000 and 18 ( 62.1%) in 2004-05 managed only 1-2
issues. 52 (12.9%) secured the business of 3-4 equity issues during the period of
study. However, 8 (25.8%) lead managers managed more than ten equity issues in
2005-06, while three lead managers each were able to secure the confidence of more
than 10 issuer companies in 2006-07 and 2007-08.
78
Table 4.4
Year wise Number of Equity Public Issues Managed by Merchant Banks
(Merchant Bankers as Lead Manager/ Co- Lead Managers/ Advisors)
Years
1-2
Issues
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
Total
Note: Source: -
3 -4
Issues
56
Issues
78
Issues
9 10
Issues
Above
10
Issues
-
Total
MBs
Involved
65
52
05
05
02
01
(80.0)
(9.6)
(9.6)
(3.8)
(1.9)
14
06
01
02
05
28
(50.0)
(21.4)
(3.6)
(7.1)
(17.8)
23
04
02
03
03
05
40
(57.5)
(10.0)
(5.0)
(7.5)
(7.5)
(12.5)
27
10
03
01
04
08
53
(50.9)
(18.9)
(5.7)
(1.9)
(7.5)
(15.1)
06
03
01
01
06
17
(35.3)
((17.6)
(5.9)
(5.9)
(35.3)
04
02
01
03
03
02
15
(26.7)
(13.3)
(6.7)
(20.0)
(20.0)
(13.3)
09
03
02
02
02
04
22
(40.9)
(13.6)
(9.1)
(9.1)
(9.1)
(18.2)
18
04
02
01
04
29
(62.1)
(13.8)
(6.9)
(3.4)
(13.8)
13
04
02
01
03
08
31
(41.9)
(12.9)
(6.4)
(3.2)
(9.7)
(25.8)
24
04
04
03
04
03
42
(57.1)
(9.5)
(9.5)
(7.2)
(9.5)
(7.2)
17
10
05
03
02
03
40
(42.5)
(25.0)
(12.5)
(7.5)
(5.0)
(7.5)
21
01
01
23
(91.4)
(4.3)
(4.3)
227
52
29
22
26
48
404
(56.2)
(12.9)
(7.2)
(5.4)
(6.4)
(11.9)
Figures in parentheses show the percentage of total merchant bankers
involved during the relevant year.
Compiled from offer documents issued by companies during the relevant
years.
79
It is revealed from the table that Indian merchant banks were able to manage a
total of 544 equity issues with an aggregate of Rs. 78,840.63 crore. This amount
constituted 52.08% of total amount mobilized through equity issues during the period
under study.
Kotak Mahindra Capital Co. Ltd managed a total of 30 equity issues which
mobilized Rs. 23,631.22 crore during the period from 1997-98 to 2008-09. On the
basis of amount of issues managed, Kotak Mahindra performed better than other
Indian merchant banks covered by the study. However, it was SBI Capital Markets
Ltd (SBI Caps.), which managed a maximum number of 43 equity issues during the
period under review. Enam Securities Ltd managed 11.15% of total funds mobilized
through equity with a total of 35 public issues during the same period.
It has been highlighted by the table that ICICI Securities Ltd remained the
preferred choice of 32 issuer companies with Rs.13,938.44 crore mobilization through
them. However, SBI Capital Markets handled the largest number of issues amounting
to Rs. 6,868.31 crore during the period of the study. Karvy Investor Services Ltd was
approached by 34 issuer companies and this mechant banker could manage Rs.
1,336.59 crore contributing 0.8% to the pool of resources mobilized during the period
under review. It remained active in public issue management services for six years
only.
It is depicted by the table that IDBI Ltd. and IDBI Capital Markets managed
only 12 public equity issues which mobilized funds amounting to Rs. 818.06 crore,
whereas Keynote Corporate Services managed 26 equity issues which involved
minimum funds amounting to Rs. 792.80 crore. IL&FS Investsmart showed their
presence in the latter part of the study period and managed 14 equity issues with an
aggregate amount of Rs. 1733.74 crore (1.14%).
On the basis of average issue size of equity managed by Indian merchant
banks, Kotak Mahindra Capital Co. managed largest sized issues with an average size
of Rs. 787.71 crore. On the other hand, Keynote Corporate Services managed
minimum sized issues with average size of Rs. 30.49 crore only during the period
under study. This merchant banker was found active in the latter part of the period
under review.
80
81
82
83
A number of tiny equity issues have been managed by many small merchant
banks, included in other merchant banks category. The number of such issues stood at
275 involving an amount of Rs. 10,021.56 crore during the period of twelve years.
The table further reveals that the top lead merchant bankers were generally absent in
2008-09 because of depressed market conditions.
Kotak Mahindra Capital Co. was again on the top of the list with the
management of 15.61% resources mobilized through equity issuers by Indian
merchant banks. It was followed by Enam Securities and ICICI Securities Ltd. with
11.15% and 9.21% share respectively.
Chart 4.3
From the above analysis, it may be concluded that Kotak Mahindra Capital
Co. and Enam Securities Ltd. performed better than other Indian merchant banks on
the basis of total amount managed. However, on the basis of number of issues, SBI
Capital Markets performed better than other Indian merchant banks during the period
under study.
As it is clear from the table, JM Morgan Stanley managed the largest number
of 29 equity issues with an aggregate amount of Rs. 24,115.92 crore (15.92%). This
was followed by DSP Merrill Lynch with the management of Rs. 22,416.23 crore
(14.81%) through 24 equity issues. These two foreign merchant bankers showed their
presence in the activities of public issue management for nine out of twelve years.
HSBC Securities & Capital (India) Ltd and Citigroup Global Markets Ltd. which
entered in this field in latter years could manage Rs. 2027.56 crore (1.34%) and Rs.
5482.80 crore (3.62%) respectively.
On the basis of average issue size managed by foreign merchant banks, it was
again JM Morgan Stanley Ltd, which managed the larger sized issues with an overall
average of Rs. 831.58 crore per issue. However, its largest average issue size
managed in a particular year (2004-05) was Rs.1928.05 crore. On the other hand,
HSBC Securities and Capital (India) Ltd could manage the minimum sized issue with
an average issue size being Rs. 506.89 crore during the period under review. Thus, the
companies issuing a large amount of equity issues to public preferred foreign
merchant bankers as their lead managers. For example, TCS relied totally on foreign
merchant banks as BRLMs/ Lead Managers for their largest issue of Rs. 5420.49
crore in 2004-05. Jet airways (India) Ltd. appointed five foreign merchant banks as
lead managers out of total six for their equity issue of Rs. 1899.35 crore. Similarly,
ICICI Ltd preferred three foreign merchant banks as BRLMs for their equity issue of
Rs. 3245.80 crore.
An analysis of the table also shows the proportion of total equity funds
managed by different foreign merchant banks. JM Morgan Stanley, with a market
share of 15.92% of the managed funds was on the top, while the minimum share
(1.34%) was that of HSBC Securities & Capital (India). DSP Merrill Lynch showed
their presence by managing 14.81% of the total funds raised through equity issues
during the period of the study.
85
86
87
Kotak
Mahindra Capital Co. Ltd and ICICI Securities Ltd were the sole lead managers for
three years. On the other hand, foreign merchant banks operating in India were
exclusively the lead managers to five largest issues out of total twelve issues during
the same period.
88
Table 4.7
Lead Mangers to the Largest Equity Issues
Year
Issuer
1997-98
Corporation Bank
1998-99
1999-00
2000-01
Hughes Tele.Com(India)
2001-02
2002-03
Canara Bank
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
Issue Size
(Rs in crores)
304.00
(26.85)
73.50
(14.58)
823.60
(27.66)
749.21
(30.16)
834.02
(77.0)
385.00
(37.06)
10,542.40
(59.16)
5420.49
(25.29)
5750
(24.28)
5788.79
(23.16)
10,123.20
(19.39%
Total MBs
involved
06
04
05
04
04
07
J M Morgan Stanley
DSP Merrill Lynch
ICICI Securities Ltd, SBI Caps. , Kotak Mahindra, J
M Morgan, DSP Merrill
Kotak Mahindra
DSP Merrill, JM Morgan
J M Morgan, DSP Merrill, J P Morgan India
05
07
10
03
10
830.66
4
(40.83)
Total
41,624.87
70
(27.49%)
Note: -Figures in parentheses show percentage of total amount mobilised through public issues of equity during the year.
Source: -Compiled from offer documents of Companies, SEBI website.
89
AXIS Bank
The issuers with the largest issue of equity amount like Tata Consultancy Service
Ltd., ICICI Bank and Cairon India Ltd. relied only upon foreign merchant banks.
Equity issues of Canara Bank (2002-03), ONGC Corporation Ltd. (2003-04) and
Reliance Power Ltd. (2007-08) were managed jointly by Indian and foreign merchant
banks. Cairon India Ltd. for their issue of Rs. 5788.79 crore appointed DSP Merrill
Lynch and ABN Amro Securities as BRLMs and Global Coordinator for their issue
while JM Morgan was the Book Runner Lead Manager.
The table further shows the contribution and importance of each largest issue
in the total amount of resources raised through equity in the respective years. Total
equity amount raised through these twelve issues accounted for 27.49% of the total
funds mobilised through equity during the period of study. The lone equity issues of
UTI Bank, Bharti Televenture Ltd and ONGC Corporation Ltd contributed 73.5%,
77% and 59.16% to the pool of resources mobilized through equity in the year 199899, 2001-02 and 2003-04 respectively.
case of single merchant bank in an issue, the same merchant bank discharges all
obligations of the manager to an issue while, the co lead managers and co managers
assist and coordinate the lead manager/ BRLM in discharge of these responsibilities.
Table No. 4.8
Single and Multiple Merchant Bankers Involved in Equity Issues
(Amount in Rs. crore)
Year
Amount
Average
Issue Size
Rs.
1997-98
28
2.50
1998-99
11
1999-00
20
2000-01
62
2001-02
2002-03
2003-04
2004-05
2005-06
43
2006-07
33
2007-08
43
2008-09
10
Total
268
70.00
(6.19)
114.00
(22.62)
246.00
(8.83)
509.00
(20.47)
6.00
(0.56)
11.00
(1.06)
64.00
(0.36)
237.00
(1.11)
2,541.00
(10.73)
2,357.00
(9.43)
3,517.48
(6.74)
549.51
(27.0)
10,221.99
(6.75)
10.39
12.30
8.21
2.00
11.00
9.14
33.86
59.09
71.42
81.80
54.95
38.14
Total
Issues
Amount
Rs.
58
1,132.00
Average
Issue
Size
Rs.
19.51
22
504.02
22.91
55
2,975.25
54.09
115
2,483.76
23.65
1,082.00
180.33
1,038.68
173.11
29
17,821.09
614.51
29
21,431.56
739
102
23,675.70
232.11
85
24,993.37
294.04
90
52,219.00
580.21
21
2,034.00
96.86
618
1,51,390.34
244.97
Note: -
The year wise figures showed that the percentage share of amount of equity
mobilised through single lead manager for the issue was 22.62%, 20.47% and 27%
in 1998-99, 2000-01 and 2008-09
mobilized through multiple merchant bankers was higher than 90% in the remaining
period under review.
The average size of the equity issues in case of multiple merchant banks
managed issues has been Rs. 403.34 crore during the study period, while it was just
Rs. 38.14 crore for the equity issues handled by single merchant banks. The average
size of issues managed by multiple merchant banks has been higher than the issues
handled by individual merchant banks during all the years covered by the study.
From the analysis, it is clear that for small sized issues, a single merchant
bank has been appointed as lead manager and large sized equity issues has been
managed by multiple merchant banks. In case of multiple merchant banks, the
merchant banks were appointed in the role of lead manager(s)/BRLM(s), co lead
managers, co-managers and as advisors to the issue.
92
Table 4.9
Merchant Banks as advisors to the Equity Issues
Year
No. of
Amount
No. of Merchant
Issues
Rs. Crore
Banks as Advisors
1997-98
10
101.54
1998-99
1999-00
10
680.82
2000-01
1076.08
2001-02
2002-03
100
2003-04
2004-05
10471.62
2005-06
2268.84
2006-07
1972.89
2007-08
532.98
2008-09
Total
44
17,204.77
41
93
On the other hand, three foreign merchant banks, viz. HSBC Capital Markets,
Prebon Yamane India Ltd. and Bank of America participated in public issue market
as advisors to single issue each. Collin & Stewart Inga Pvt. Ltd advised Future Capital
Holding Ltd. for their public issue of equity of Rs. 491.34 crore in 2007-08.
4.3
Earlier, public limited companies have been raising resources in small amounts
through different instruments of debt securities. However, public sector undertakings
(PSUs) also started issuing bonds in the financial year 1985-86. The economic reform
initiatives since 1992 have made drastic changes in the structure of corporate debt
market in India. During the initial years of the period under review, the corporate debt
issues have shown a noticeable rise due to falling interest rates, adequate availability
of funds and the bearish equity market in the country. The position regarding public
issue of debt during the period under review have been presented in the following
table:
Table 4.10
Public Issue of Debt Capital
Year
1997-98
Debt Issues by
ICICI Ltd.
No.
Amount
Rs.
2
919.51
Debt issue by
IDBI Ltd.
No.
Amount
Rs.
1
984.86
1998-99
3,064.35
4,342.37
10
7,406.72
1999-00
2,574.89
2,073.00
10
4,697.89
2000-01
2,978.09
1,161.05
4,139.14
2001-02
4,017.61
972.91
350.17
13
5,340.69
2002-03
2,342.63
2,350.26
4,692.89
2003-04
1,352.12
2,971.46
4,323.58
2004-05
1,627.42
2,467.43
4,094.85
2005-06
2006-07
2007-08
1,000.00
1,000.00
2008-09
1,500.00
1,500.00
Total
42
19,876.62
21
17,323.34
19,25.17
67
39,125.13
50.00
As is shown in the table, the public debt issue market during the period of
study was dominated by two domestic Financial Institutions, viz., ICICI Ltd. and
IDBI Ltd. ICICI Ltd. had 42 debt issues of safety bonds of various types for an
aggregate amount of Rs. 19,876.62 crore during the period from 1997-98 to 2007-08.
IDBI Ltd raised an aggregate amount of Rs. 17323.34 crore through 21 debt issues to
public during the same period. Actually, the issue of bonds by these two issuers was
made through various tranches. All the tranches of bond issues were with green shoe
option to the extent of double the amount of issue. Nearly all the debt issues were
oversubscribed, in some cases more than double the amount of issue and the entire
amount subscribed were retained by the issuers. The largest amount of Rs. 7,406.72
crore was raised in 1998-99 through ten debt issues, while the year 2007-08 and 200809 saw single debt issue each. Tata Capital Ltd. raised Rs. 1500 crore in 2008-09
through non convertibel debentures. On the other hand, no corporate debt issue was
made to the public in the year 2005-06 and 2006-07 due to the buoyant equity market
during this period.
95
Table 4.11
Merchant Banks as Lead Managers in of Debt Issues
(Amount in Rs. Crore)
Merchant Banks
Year
1997-98
1998-99
1999-00
2000-01
2001-02
J M Morgan
No. of
Issues
2
7
7
7
9
Amount
Rs.
919.52
(47.65)
3.064.34
(41.37)
2.574.89
(54.80)
2.978.09
(71.95)
4.017.61
(75.22)
Average
amount
Rs.
IL&FS Investsmart
Average
No. of Amount
amount
Issues
Rs.
Rs.
25.00
1
25.00
(1.29)
459.76
437.76
367.84
425.44
446.4
No.
of
Issues
ICICI Securities
Average
Amount
amount
Rs.
Rs.
1,929.22
482.3
10
7,406.72
740.67
10
4,697.89
469.79
4,139.14
459.90
13
5,340.69
410.81
780.87
4,692.89
586.61
450.70
4,323.58
720.60
542.47
4,095.05
818.97
2,342.63
(49.92)
1,352.12
(31.28)
1,627.42
(39.75)
-
2006-07
2007-08
1,000.00
(100)
1,000.00
1,000.00
1,000.00
2008-09
1,500.00
1,500.00
1,500.00
Total
23
17,723.55
(45.30)
770.56
33
14554.45
(37.20)
441.04
5,322.17
(13.60)
591.35
25
25
1500
67
39,125.18
583.96
2002-03
2003-04
2004-05
2005-06
Note: - Figures in parentheses show percentage of total amount mobilised through public issues of Debt during the year.
Source: - Compiled from Offer Documents of Companies, SEBI Website.
96
1,500.00
(100)
1,500.00
(3.83)
However, ICICI Ltd. appointed DSP Merrill Lynch Ltd. as their chief lead
manager for the last three years. DSP Merrill Lynch Ltd.s share in the management
of debt issues for three years was found to be Rs. 5,322.17 crore which came through
9 debt issues of ICICI Bank Ltd. In the year 2003-04, DSP Merrill Lynch Ltd. was
joined by Enam Securities Ltd. for the management of three debt issues of ICICI
Bank Ltd. On the other hand, IL& FS Investsmart was the lone lead manager for
debenture issue of Rs. 25.00 crore by Noida Toll Bridge Co. Ltd. Similarly, ICICI
Securities Ltd along with Citigroup Global Markets and DSP Merrill Lynch was the
lead managers for the debt issue of Rs. 1,500 crore by Tata Capital Ltd. in 2008-09.
Overall, SBI Capital Markets Ltd. has been the leader in the management of
debt issues to public with its share at 45.30% of the total fund mobilised. This was
followed by two foreign merchant bankers, viz, JM Morgan Stanley Ltd. and DSP
Merrill Lynch Ltd. with their share standing at 37.20% and 13.60 % respectively of
total funds raised through debt issues.
97
Table 4.12
Merchant Bankers as Co-Lead Managers/ Joint Lead Managers in Debt Issues
(figures in Rs. Crores)
Merchant Banks
Total
Year
Amount
JM Morgan
DSP Merrill
Enam Securities
Kotak Mahindra
SBI Caps
R R Financial
KJMC Global
Bajaj Capital
Mobilised
Issues
Amount
Issues
Amount
Issues
Amount
Issues
Amount
Issues
Amount
Issues
Amount
Issues
Amount
Issues
Amount
1997-98
1,929.22
01
984.86
03
1,904.37
03
1,904.37
04
1,929.37
03
944.51
03
1,904.37
1998-99
7,406.72
03
4,342.37
10
7,406.72
10
7,406.72
10
7,406.72
07
3,064.34
10
7,406.72
03
4,342.37
1999-00
4,697.89
04
1,633.54
10
4,697.89
09
4,647.89
10
4,697.89
07
2,574.89
09
4,647.89
02
2,073.00
03
1,527.51
2000-01
4,139.14
09
4,139.14
09
4,139.14
09
4,139.14
07
2,978.09
09
4,139.14
02
1,161.05
09
4,139.14
2001-02
5,340.69
04
1,323.08
09
4,017.61
12
4,990.52
13
5,340.69
07
3,596.02
03
972.91
12
4,990.52
2002-03
4,692.89
08
4,693.52
05
2,350.46
05
2,350.46
05
2,350.46
02
2,343.06
08
4,693.52
08
4,693.52
08
4,693.52
2003-04
4,323.58
06
4,323.58
03
2971.46
06
4,323.58
03
2,971.46
06
4,323.58
06
4,323.58
06
4,323.58
2004-05
4,095.05
05
4,094.85
02
2,467.43
02
2,467.43
02
2,467.43
05
4,094.85
05
4,094.85
05
4,094.85
2005-06
2006-07
2007-08
1,000.00
01
1,000.00
01
1,000.00
01
1,000.00
2008-09
1,500.00
01
1,500.00
Total
39,125.18
31
21,395.80
53
32,455.08
57
33,230.11
56
31,303.16
26
11,904.89
57
34,806.09
29
21,661.28
44
24,769.12
Source: - Compiled from offer documents of issuer companies for relevant years
98
In addition to this, both debt issuers i.e. ICICI Ltd. and IDBI Ltd. also
appointed a number of merchant banks as co-lead managers to the issues. Among the
co-managers to debt issues, GSFS Capital & Securities Ltd. participated in total of 42
debt issues, Integrated Enterprises Ltd. in 40 issues, Karvy Investors Services Ltd. in
39 debt issues, Sobhagya Capital Option Ltd. in 23 issues and AK Capital Services
and Allianz Securities Ltd in 12 issues each. Other merchant bankers who participated
in debt issues as co-managers included Bajaj Capital Ltd., United Bank of India,
Centrum Finance Ltd. and UTI Securities Ltd.
4.4
99
Table 4.13 exhibits the public sector banks who acted as lead managers and
co-lead managers in the public issues of equity and debt during the period from 199798 to 2008-09.
Table 4.13
Public Sector Banks & Subsidiaries as Managers to Public Issues
S. No.
Merchant Banks
(A)
Equity Issues
No.
Amount
Rs. in crore
Debt Issues
No.
Amount
Rs. in crore
Lead Managers
1.
43
6,868.31
23
17,723.60
2.
Canara Bank
14
65.97
3.
10
471.42
4.
01
20.40
5.
01
2.50
6.
Dena Bank
01
1.80
70
7,430.40
23
17,723.60
Total
(B)
Co-lead Managers
1.
11
25,822.32
26
11,904.89
2.
Canara Bank
09
1,491.95
5,554.85
3.
08
3,952.42
4.
02
126.25
5.
01
2,188.36
1,843.49
6.
02
123.87
70
7.
Union Bank
01
829.54
34
34,534.71
34
18,069.19
Total
Source:
It has been revealed in the table that merchant banks of public sector banks
were the lead managers for 70 equity issues and 23 debt issues out of total 685 public
issues floated during the period under review. Dominant role of SBI Capital Markets
Ltd as lead manager and co-lead manager has been evident from the table. It was the
co-BRLM/ lead manager to the largest issues, that is, the issue of DLF Ltd and
Reliance Power Ltd. in 2007-08. Canara bank followed SBI Capital Markets Ltd with
14 equity issues of small size. Allbank Finance Ltd (a subsidiary of Allahabad Bank)
was the lead manager to ten equity issues including six equity issues in 2008-09 itself.
100
Table 4.13 further shows the merchant bankers of public sector banks in the
role of co-lead managers. SBI Capital Markets Ltd participated in almost all debt
issues either as lead managers or co-lead managers. It was also co-lead manager for
nine equity issues during the period of study. Canara Bank and BOB Capital Markets
Ltd were the other merchant banks who played a major role as co-lead managers from
among public sector banks. In addition to the merchant banks mentioned in the table,
Indbank Merchant Banking Services Ltd, Vijay Bank, Central Banks of India, Andhra
bank, and State bank of Travancore were the co-lead managers for single issue of
equity each.
In addition to this, 14 issuer companies of equity issues appointed public
sector banks or their subsidiaries as advisors to their equity issues. BOB Capital
Market Ltd, a subsidiary of Bank of Baroda, acted as advisors to four public issues of
equity including an issue by Bank of Baroda for an amount of Rs. 1633.00 crores.
Canara Bank advised three issuer companies in the matters of issue of equity shares.
Punjab National Bank appointed PNB Gilts Ltd as advisors to their equity issue of
Rs. 3,120 crore. Similarly, Indbank Merchant Banking Services Ltd was the advisor to
the issue of Indian bank. Other public sector banks and subsidiaries who were
involved in the role of advisors to the equity issues included SBI Capital Markets Ltd,
Central Bank of India, State Bank of Hyderabad and PNB Capital Services Ltd.
4.5
Rights Issues
A rights issue is a primary source for a listed company to raise additional
capital from the primary market. Rights issue means an issue of capital under section
81 (1) of the Companies Act, 1956, to be offered to the existing shareholders of the
company through a letter of offer. The right herein refers to the entitlement of a
shareholder to apply for and receive additional shares in a company. The application
for additional shares is only a right and not an obligation on the shareholders. A
record date is fixed for the ascertainment of the right. The rights are normally
offered in a particular ratio to the number of securities held on the record date. The
shareholder is given the option to receive right shares or to renounce the right in
favour of any other person of his choice. Once the right is renounced, the renouncee is
entitled to subscribe for and receive the right shares. As the right issue is made by a
listed company, the market price becomes a benchmark for the price of the right issue.
Since the right issue has to be made to the existing shareholders of the company, it
101
has to be priced more favourably for the shareholders (below the market price of the
share) than a public issue. The issue price of the right issue is determined by the issuer
in consultation with the lead manager to the issue.
As per the provisions of SEBI (Merchant Bankers) Regulations, 1992, any
issue of shares by way of rights by a company listed in a recognized stock exchange
and exceeding Rs. 50 Lakhs shall be managed by SEBI registered merchant banker.
Regulation 18(2) requires a lead manager to enter into an agreement, before taking up
the assignment relating to the issue, with the issuer, setting out therein the mutual
rights, duties and liabilities relating to such issue, in particular to disclosures,
allotment and refund.
(ii)
Submission of letter of offer to SEBI The draft letter of offer is filed with
SEBI by the lead manager six weeks prior to the proposed date of opening of
the rights issue. Along with the letter of offer, other mandatory documents,
such as the Memorandum of Understanding between lead manager and the
issuing company, due diligence certificate and the prescribed undertaking by
the issuer and lead manager have to be submitted to SEBI for observations and
comments. If any modification/ alteration is suggested by SEBI within 21 days
of receipt of such draft, it shall be incorporated in the letter of offer by the
merchant banker before filing a copy of the letter of offer with SEBI. The final
copy of letter of offer shall be submitted by the lead manager to SEBI two
weeks before the issue opens for subscription.
(iii)
Compliance with rules and regulations The lead manager submitting the
letter of offer shall be responsible for ensuring compliance with SEBI rules,
regulation, guidelines and requirements of other laws for the time being in
force.
102
(iv)
Sending the letter of offer to shareholders The lead manager shall ensure that
the letter of offer is sent to the shareholders at least one week prior to the date
of opening of the issue.
(v)
Advertisement of rights issues- The lead manager has to ensure the publication
of an advertisement in English, Hindi and the regional language as prescribed,
at least 7 days before opening of the issue. The right issue is kept open for at
least 30 days and not more than 60 days.
(vi)
Post issue obligations The lead manager is responsible for the finalization of
allotment process. After the allotment of right shares, the allotment advices
should be sent to the shareholders within 6 weeks of the closure of the issue.
The post issue monitoring report is to be filed in a prescribed form with SEBI
by the lead manager on the 3rd day and the 50th day after the closure of the
issue.
4.6
market, declining profitability of many listed companies and some adverse events at
national and international level contributed to the poor state of rights issues during the
initial period of study till 2002-03. However, from 2003-04 onward, the buoyant
secondary market, favourable economic environment in the country as a result of high
growth rate of GDP, low interest rate, high flow from Foreign Institutional Investors,
higher industrial growth and high returns in the secondary market contributed
favourably to rights issue market.
During the period of this study, the rights issue market presented
comparatively a dismal picture. There were 330 rights issues during the period of 12
years and the funds mobilized through these issues stood at Rs. 63,624 crore. In
comparison to this, funds raised through right issues during five years period ( 199293 to 1996-97) immediately preceding the period of the study was as high as Rs.
37,973 crore mobilised through a total number of 1,645 rights issues.
The position regarding number of rights issues, amount of issues and the
number of merchant banks involved as lead managers and Co managers to the issues
during the period of study has been explained in table 4.14 and chart 4.5
103
Table 4.14
Rights Issues Floated By Joint Stock Companies and Merchant Banks involved
(Amount in Rs. crore)
Years
Issues
Floated
49
Amount
Mobilised
Amount
1,703
Average
Issue Size
Amount
34.75
1997-98
1998-99
26
568
21.84
18
24
1999-00
28
1,560
55.71
17
24
2000-01
27
729
27.00
18
20
2001-02
13
1,041
80.07
11
20
2002-03
12
431
35.91
10
14
2003-04
22
1,006
45.73
15
18
2004-05
26
3,616
139.07
14
19
2005-06
36
4,126
114.61
19
21
2006-07
38
3,704
97.47
20
22
2007-08
30
3,2518
1,083.93
25
26
2008-09
23
12,622
548.78
20
21
Total
330
63,624
192.8
220
66
286
Source: - Compiled from offer documents of companies, SEBI website and Prime
Database.
The trend in the year wise amount raised through rights issues can be
witnessed from the following chart also.
104
Chart 4.5
The table shows that the largest amount of Rs. 32,518 crores was mobilised in
2007-08. This amount included a sum of Rs. 16736.30 crore raised by State bank of
India alone. The year 2008-09 further saw a declining trend in rights issues market
and only 12, 622 crores could be raised through 23 issues during this year. However,
only Rs. 431 crore could be raised through 12 issues in 2002-03. The largest number
of issues (49) were witnessed in 1997-98 and the lowest number of 12 issues took
place in 2002-03.
Average size of the issue also showed a fluctuating trend during this period. It
was 34.75 crore in 1997-98, courtesy the largest rights issue of Rs. 799.29 crore by
Ispat Industries Ltd., which individually contributed 47% of years total mobilization.
In 1998-99, average issue size declined to the lowest figure of Rs. 21.84 crore. A
recovery in rights issue market in 1999-2000 increased the average issue size to Rs.
27 crore in 2000-01. Average issue size further increased to 80.07 crore during the
year 2001-02 due to a single rights issue of debentures of Rs. 671.63 crore by Tata
Engineering & Locomotive Co. Ltd. It again increased in 2004-05 to Rs. 139.07 crore
after a decline in previous two years. The year 2007-08 witnessed the highest average
issues size of Rs. 1083.93 crores due the largest issue of Rs. 16,736.30 crore by State
Bank of India. Overall, the average size of the issue was 192.80 crore.
The table 4.14 further shows the number of merchant banks involved in the
management of rights issues in the role of lead managers and co lead managers/
105
advisors to the issue. In all, 286 merchant banks (220 as lead managers and 66 as colead managers/advisors) were involved in the management of 330 rights issues during
the period under review. The largest number of merchant bankers involved was in the
year 1997-98 which was 57 for 49 rights issues. On the other hand, only 14 merchant
banks were involved in 12 rights issues during the year 2002-03. A declining number
of merchant banks involved in the management of rights issues were noticed during
the latter period of study. The trend shows that only reputed and professional
merchant banks with good track record has remained in the management activities of
rights issues.
4.7
106
Table 4.15
Rights Issue Management by Lead Merchant Bankers
(Amount in Rs. crore)
Years
1997-98
239.38
26.60
40
(14.05)
1998-99
06
279.04
07
728.56
46.51
20
04
115.33
104.08
21
05
868.8
28.83
23
01
7.83
173.76
08
03
258.94
7.83
11
04
274.38
86.31
19
04
2,471.49
68.59
22
04
1,292.96
617.87
32
06
21,956.80
323.24
34
04
7,755.44
3659.47
24
57
36,248.95
(56.97)
831.68
39.6
28
1,560.24
55.72
614.08
26.7
27
729.41
27.01
172.46
21.56
13
1,041.26
80
423.43
38.49
12
431.26
35.94
746.86
39.31
22`
1,005.80
45.72
3,341.62
151.89
26
3,616.00
139.08
1,654.33
51.7
36
4,125.82
114.6
2,410.54
70.9
38
3,703.50
97.46
10,561.72
440.07
30
32,518.52 1,083.95
256.13
23
12,622.00
548.78
100.27
330
63,624.39
192.8
(32.48)
1938.86
19
(61.44)
Total
21.83
(65.09)
(67.52)
2008-09
567.56
(40.10)
(34.91)
2007-08
26
(92.41)
(59.90)
2006-07
14.43
(74.26)
(7.59)
2005-06
288.52
(98.19)
(25.74)
2004-05
34.75
(16.57)
(1.81)
2003-04
1,703.02
(84.19)
(83.43)
2002-03
49
(53.30)
(15.81)
2001-02
36.59
(50.84)
(46.70)
2000-01
Average
amount
(85.95)
(49.16)
1999-00
1,463.64
Total
Amount
4,866.56
(38.56)
635.95
273
27,375.44
(43.03)
Note: -
107
The following chart also shows the comparative share of foreign and Indian
merchant bankers in the year wise amount mobilization through right issues.
Chart 4.6
Further, the table reveals that 43.03% of total amount mobilized through rights
issues was managed by Indian merchant bankers. This share was 56.97% in case of
foreign merchant banks. Foreign merchant banks were able to secure the business of
83.43% of total amount in 2001-02, which went down to 7.59% only in 2004-05. In
2002-03, foreign merchant banks were able to manage only one rights issue of a small
amount of Rs. 7.83 crore. On the other hand, the proportion of total amount of rights
issues managed by Indian merchant banks was 16.57% in 2001-02 which increased to
as high as 98.19% in 2002-03.
The analysis of average issue size of right issues managed by both categories
of merchant bankers shows that foreign merchant banks handled comparatively higher
issue size in all the years except 2004-05. So, foreign merchant banks were the
preferred choice of issuers of comparatively large amount of rights issues.
108
merchant banks contributed 43.03% to the pool of total funds mobilized through
rights issues.
The table 4.16 further shows that SBI Capital Markets Ltd. was on the top
rank with the management of Rs. 5,780.79 crore through 25 rights issues. This was
followed by ICICI Securities and Kotak Mahindra Capital Co. Ltd. with Rs. 5,296.03
crore and Rs. 4444.14 crore respectively. Among the top ranking merchant banks,
Enam Securities managed a sum of Rs. 3479.31 crore through 15 rights issues and
Ambit Corporate Finance secured the busniess of Rs. 1125.55 crore through five
issues. Keynote Corporate Services Ltd. was able to participate in 31 issues of Rs.
650.22 crores. Other merchant bankers involved as lead managers were Karvy
Investor Services for Rs. 172.69 crore, IL&FS Investsmart with five issues of Rs.
301.49 crore Rs. 301.49 crore and Lodha Capital three issues of Rs. 179.22 crore.
On the basis of number of rights issues managed, Keynote Corporate Services
was the preferred choice of the largest number of issuers (31 rights issues) with an
average size of Rs. 20.97 crore. ICICI Securities and SBI Capital Markets Ltd were
the other top ranking players with the involvement in 28 and 25 rights issues
respectively. Lodha Capital participated in only three issues while IL&FS Investsmart
was able to manage five rights issues.
The analysis of average size of rights issues managed by different Indian
merchant bankers showed that Kotak Mahindra Capital Co. managed largest sized
rights issues (eleven in number) with an average issue size of Rs. 404.14 crore. It was
followed by Enam Securities with an average issue size of Rs. 231.95 crore from 15
rights issues. On the other hand, Karvy Investors Services and Keynote Corporate
Securities Ltd. managed minimum sized issues during the period under review with
average issue size of Rs. 17.26 crore and Rs 20.97 crore respectively.
ICICI Securities was the manager of rights issues to the tune of 8.32% of total
fund mobilised during the period of study. It managed 60.92% of total rights issue
amount in 1997-98 and 62.70% in 2004-05. However, its share declined to 1.12% in
2007-08 and less than one percent in 2006-07. Similarly SBI Capital Markets Ltd
showed their presence by managing 9.08% of total resource mobilised through rights
issues and participated continuosly during the entire period under review except in
1997-98.
109
110
111
112
113
Chart 4.7
114
115
In the category of other foreign merchant banks, Deutsche Equities (India) was
the lead manager along with other merchant bankers for the rights issue of Rs. Rs.
16,736.30 crore by State bank of India in 2007-08. Similarly, JP Morgan and ABN
Amro Securities (India) Ltd participated as lead managers for the largest issue of Rs.
5,047.70 crore and 4,145.81 crore by Hindalco Industries and Tata Motors
respectively in 2008-09. Standard Chartered Grindley Bank acted as lead managers in
two rights issues of Rs. 117.09 crore and UNO Asia Investment Banque Ltd. was the
lead manager for a single rights issue of Rs. 5.00 crore. The amount of rights issues
managed by foreign merchant bankers has been shown in the following chart also.
Chart 4.8
4.7.3 Public Sector Banks and their Subsidiaries as Managers to the Rights
Issues
From an analysis of letters of offers issued by companies for rights issues
during the period under review, a dismal performance of public sector banks and
their subsidiaries was witnessed in the management of rights issues with the exception
of SBI Capital Markets Ltd. This merchant bank competed with other top ranking
merchant banks in India by handling 25 rights issues for Rs. 5,780.79 crore as a lead
manager.
116
Number and amount of rights issues managed by all public sector banks in the
capacity of lead merchant banker is presented in Table 4.18
Table 4.18
Public Sector Banks and Their Subsidiaries as Lead Managers in Rights Issues
S. No
Merchant Banks
No. of rights
Issues
25
Amount
(Rs. In crore)
5,780.79
1.
2.
01
74.93
3.
Canara Bank
03
73.29
4.
02
63.85
5.
02
38.44
6.
03
36.21
7.
BOI Finance
02
7.47
8.
Vijay Bank
01
5.27
9.
01
1.35
Total
40
6,081.6
Source: - Compiled from Letters of Offer by Issuer Companies, SEBI website and
Prime Database.
As revealed in the table, out of total 40 rights issues lead managed by
merchant banks divisions/ subsidiaries of public sector bank, SBI Capital Markets Ltd
had a share of 25 right issues involving a toal amount of Rs. 6,081.60 crore. All
other merchant banker were the lead manager for one or two right issues of very small
size. Two right issues managed by Indbank Merchant Banking Services Ltd included
one issue of Rs. 60.50 crore jointly lead managed by private merchant banker, AK
Capital Services. Ltd.
In addition to this, Canara Bank was the co-lead manager to four rights issues
for an aggregate amount of Rs. 921.09 crore, including a largest issue of Rs. 977.29
crore in 1997-98. BOB Capital Markets Ltd., a subsidiary of Bank of Baroda, acted
as co-lead manager in one rights issue of Rs. 8.96 crore only in 1997-98.
Table 4.19
Mangement of the Largest and the Smallest Rights Issues.
Year
Largest Issues
1997-98
1998-99
Issues Size
Rs.
799.29
(45.85)
Co-Lead Managers
ICICI Securities
Smallest Issues
Ashu
Ltd.
Hickson
160.84
DSP Merrill Lynch
OPG Metal &
(22.33)
Finance Ltd.
1999-00 IFCI Ltd.
352.31
SBI Capital Markets Ltd.
India
Com
(22.58)
Directories
2000-01 Centurian Bank
128.07
SBI Capital Markets Ltd.
Cede Investment
(17.54)
Ltd.
2001-02 Tata
Engineering
&
671.62
J M Morgan Stanley
----Mindteck (India)
Locomotive Ltd.
(64.51)
Ltd.
2002-03 Ballarpur Industries Ltd.
217.09
Kotak Mahindra Capital Co.
ICICI Securities
IPI Steel Ltd.
(50.34)
2003-04 Electrolux Kelvinator Ltd.
199.77
Ambit Corporates
-----Manapuuram
(54.54)
General Finance
2004-05 State Industries (India) Ltd.
1972.30
ICICI Securities
J.M.
Morgan,
JP Coonoor
Tea
(54.54)
Morgan
Estate Co.
2005-06 Hindalco Industries Ltd.
2226.60
J.M. Morgan Stanley
--------Bhagwati
(53.97)
DSP Merrill Lynch
Autocast Ltd.
2006-07 Aditya Birla Nuvo Ltd.
779.25
Enam Financial,
-Kaycee
(21.04)
DSP Merrill
Industries Ltd.
2007-08 State Bank of India
16,736.30
Citigroup, CLSA India,
Kanpur
(51.46)
Deutsche, DSP Merrill, Kotak, SBI Capital
Plastipack Ltd.
2008-09 HIndalco Industries Ltd.
5,047,70
ABN Amro, Citigroup, Deutsche, DSP Multiplus
(40.00)
Merrill, SBI Caps.
Holdings Ltd.
Total
46,027.44
(72.34)
Note: - Figures in parentheses denote percentage of total amount mobilised through rights issues during the respective year.
Source: - Compiled from letters of offer of Companies, SEBI website.
118
Issue Size
Rs.
0.45
(Amount in Crores)
Lead Manager (s)
Suraj Securities
0.50
N.A.
1.00
0.20
C.D. Equisearch
0.94
1.76
1.50
1.25
2.56
1.99
Chartered
Capital
Investment
Vivro Financial Services
3.54
0.48
18.71
&
The year wise relative importance of each such rights issue can be judged
from the percentage share of each largest issue in the total amount mobilised through
rights issues in each year.
The twelve largest rights issues as shown in the table contributed a total
amount of Rs. 46,027.44 crore in the pool of resources mobilised through rights
issues. This was 72.34% of total rights issues amount. The largest amount of Rs.
16,736.30 crores was raised through rights issues by State Bank of India in 2007-08.
The amount stood at 51.46% of the total amount raised in that year.
The single largest
contributed 64.51% of the total funds mobilised in 2001-02. Similarly, rights issues of
equity shares by Sterlite Industries Ltd. for Rs. 1972.30 crore accounted for 54.54%
of total funds raised through rights issues in 2004-05.
The table 4.19 further shows that ICICI Securities Ltd. and SBI Capital
Markets Ltd. were the lead managers for two largest rights issues each. DSP Merrill
Lynch Ltd. handled one largest rights issue independently and three issues jointly
with JM Morgan Stanley Ltd. and Enam Financial Services Ltd and other merchant
bankers. The largest issue of Rs. 2226.60 crore in 2005-06 was lead managed jointly
by two foreign merchant banks. Foreign merchant bankers dominated in the
management of largest rights issues in 2007-08 and 2008-09 as well.
Five of twelve issuer companies appointed multiple merchant banks to handle
their issues. The maximum number of six merchant bankers were engaged by Ispat
Industries Ltd. in their rights issue of Rs. 799.29 crore in 1997-98 and by State Bank
of India in their rights issue of Rs. 16,736.30 crore. in 2007-08.
The year wise smallest rights issues along with the amount of individual issues
is also available in the table. All smallest rights issues were managed by one lead
managers and co lead managers were not appointed in any case. All the merchant
bankers for handling the smallest rights issues were Indian private merchant bankers.
Conclusion
Merchant banks play an important role as one of the intermediaries in the
management of public issues. They play the role of lead managers/ BRLMs, co-lead
managers and as advisors to the public issues. Both Indian and foreign merchant
bankers participated in issue management activities during the period under review.
However, Indian merchant bankers dominated the issue activities of equity shares
119
both with respect to number nad amount of issues. Companies making large size issue
of equity preferred foreign merchant bankers as lead managers.
Among the Indian merchant banker Kotak Mahindra Capital Co., Enam
Securities, SBI Capital Markets, karvy Investor Services, ICICI Securities were the
major participants in the management of public as well as rights issues. JM morgan
Stanley, DSP Merrill Lynch and ABN Amro played the leading role from among the
foreign merchant bankers.
Analysis of offer documents showed that the large size issues were managed
by multiple lead managers while single merchant banker acted as lead manager in
small size issues. Appointment of merchant bankers as advisors to the issue was not
the common practice among issuer companies. A number of lead managers, co-lead
managers, co-managers were appointed by both ICICI Ltd and IDBI Ltd. for their
bond issues to public. Further, merchant banking divisions/ subisidiaries of public
sector banks showed as very limited participation in public issue management of
equity and debt during the period under review. With the exception of SBI Capital
Markets and Canara Bank, no other public sector bank performed a significant role in
the issue management activities.
120
Table 4.5
Indian Merchant Banks as Lead Managers in Public Issues of Equity
(Amount in Rs. crore)
Year
Total
Amount
Raised
Rs.
Merchant Banks
Kotak Mahindra Capital Co.
No. of
Issues
Amount
Rs.
144.38
(12.72)
-
1997-98
1132
01
1998-99
504.02
1999-00
2975.25
03
2000-01
2483.76
02
2001-02
1082
2002-03
Enam Securities
Average
amount
Rs.
144.38
No. of
Issues
Amount
Rs.
01
ICICI Securities
Average
amount
Rs.
-
No. of
Issues
Amount
Rs.
02
11.61
02
39.30
05
4.03
367.00
(32.42)
104.20
(20.63)
178.68
(6.00)
-
446.66
01
1190.91
(40.03)
893.21
(35.96)
-
11.61
(2.18)
39.3
(1.31)
4.03
01
1038.68
02
2003-04
17821
03
1789.54
02
03
21431.56
02
1924.11
06
494.98
02
2005-06
23675.7
05
681.64
10
263.67
07
2006-07
24993.37
03
585.69
07
376.67
03
2007-08
52,219.00
10
681.29
07
1,127.61
05
2008-09
2034.00
01
207.66
238.50
(1.34)
2969.88
(13.85)
2636.72
(11.14)
3092.68
(12.37)
7,893.28
(15.12)
-
119.25
2004-05
Total
1,51,390.34
30
5368.63
(30.12)
3848.22
(17.95)
3408.22
(14.39)
1757.09
(7.03)
6,812.90
(13.04)
207.66
(10.20)
23,631.22
(15.61)
787.71
35
562.87
32
01
16886.00
(11.15)
164.49
(15.20)
673.00
(64.79)
987.63
(5.54)
2790.99
(13.02)
2051.60
(8.66)
1588.35
( 6.35)
5,032.50
(9.64)
13,938.44
(9.21)
Average
amount
Rs.
183.50
No. of
Issues
Amount
Rs.
02
52.10
04
35.73
06
04
164.49
217.72
(19.23)
171.30
(33.99)
351.61
(11.80)
271.95
(10.95)
-
82.24
01
329.21
06
1395.50
04
293.09
08
529.45
06
1,006.50
02
435.58
43
Average
amount
Rs.
108.86
42.82
58.60
67.98
-
100.00
(9.62)
1842.21
( 10.33)
410.13
(1.91)
1289.12
(5.44)
1237.18
(4.95)
977.09
(1.87)
-
100.00
6868.31
(4.53)
159.73
307.03
102.53
161.14
206.20
488.51
-
Contd.......
81
Year
UTI Securities
IL&FS Investsmart
No. of
Issues
Amount
Rs.
Average
amount
Rs.
No. of
Issues
Amount
Rs.
Average
amount
Rs.
No. of
Issues
Amount
Rs.
Average
amount
Rs.
No. of
Issues
Amount
Rs.
Average
amount
Rs.
1997-98
01
5.79
5.79
1998-99
1999-00
05
19.67
3.93
02
12.55
6.28
2000-01
10
7.76
03
15.53
5.18
01
02
133.26
( 5.36)
-
66.63
50.00
(2.01)
-
50.00
2001-02
77.64
(3.13)
-
2002-03
01
44.86
2003-04
01
10.00
10.00
01
19.88
19.88
01
44.86
(4.32)
30.00
30.00
2004-05
01
31.78
31.78
03
118.38
01
151.2
151.2
01
35.00
35.00
2005-06
10
78.69
10
33.14
06
02
129.28
64.64
05
49.10
06
82.84
02
559.82
(2.36)
176.81
93.30
2006-07
786.90
(3.32)
245.6
88.41
04
02
82.50
07
45.31
02
04
721.05
(1.38)
-
360.52
165.00
(0.32)
-
Total
34
1,336.59
(0.88)
39.31
33
1,436.15
(0.95)
43.52
14
1733.74
(1.14)
123.84
354.50
(1.41)
257.03
(0.49)
69.75
(3.42)
978.78
(0.64)
88.62
2007-08
236.75
(1.10)
331.44
(1.40)
497.07
(1.98)
317.14
(0.61)
-
01
14
64.26
69.75
69.91
Contd.......
82
Year
Amount
Rs.
1997-98
04
1998-99
211.98
(18.72)
-
1999-00
2000-01
Average
amount
Rs.
53.00
No. of
Issues
Amount
Rs.
2001-02
01
2002-03
2003-04
2004-05
2005-06
Amount
Rs.
Average
amount
Rs.
-
43
17
02
8.85
4.42
22
03
17.90
5.97
79
74.50
(6.88)
74.50
03
175.16
(15.4)
120.71
(23.94)
152.84
(5.13)
68.23
(2.74)
8.99
01
06
01
7.53
7.53
03
68.00
68.00
06
298.03
(1.26)
203.74
49.71
29
10.85
(1.04)
91.99
(0.5)
50.8
1576.09
(6.65)
2006-07
05
245.40
49.08
05
40.74
26
1863.31
(7.4)
2007-08
02
218.18
109.09
03
93.70
31.23
33
4,516.71
(0.41)
(8.65)
2008-09
06
163.05
27.17
13
1385.88*
(6.69)
(68.13)
Total
12
818.06
68.17
26
792.8
30.49
275
10,021.56
(0.54)
(0.52)
(6.62)
Note: Figures in parentheses show percentage of total amount mobilised through public issues of equity during the year.
* This amount includes Rs. 333.66 crore managed by Allbank Finance Ltd., Rs. 169.10 by Moti lal Oswal, Rs. 207.66 by
Edelweiss and Rs. 148.97 crore by Almondz Global Securities
Source: - Compiled from Offer Documents of Companies, SEBI Website and Prime directories of releveant Years.
83
Average
amount
Rs.
4.07
No. of
Issues
Amount
Rs.
53
7.10
20
6.94
46
0.86
105
3.00
05
10.85
05
15.33
23
16.93
24
54.34
93
71.66
72
136.87
77
122.58
21
36.44
544
1122.03
(99.10)
407.82
(80.92)
1954.41
(65.69)
1930.71
(77.73)
247.98
(22.92)
828.71
(79.8)
8588.84
(48.20)
10532.28
(49.15)
13135.22
(55.48)
11261.73
(45.06)
27,004.56
(51.71)
1826.34
(89.80)
78840.63
(52.08)
Average
amount
Rs.
21.17
20.39
42.48
18.36
49.60
165.74
373.4
438.84
141.24
156.41
350.71
86.97
144.92
Table 4.6
Foreign Merchant Banks as Lead Managers in Public Issues of Equity
(Amount in Rs. crore)
Years
1997-98
1998-99
Total
amount
raised
Rs.
1132
504.02
1999-00
2975.25
03
2000-01
2483.76
05
2001-02
1082.00
01
2002-03
1038.68
01
2003-04
17821.00
03
2004-05
21431.56
02
2005-06
23675.70
06
2006-07
24993.37
04
2007-08
52,219.00
03
2008-09
2034.00
Total
1,51,390.34
J M Morgan Stanley
No. of
Amount
Average
Issues
Rs.
amount
Rs.
01
6.25
6.25
-
29
682.36
(22.93)
270.68
(10.90)
834.02
(77.08)
209.97
(20.2)
4251.03
(23.85)
3856.10
(17.99)
4717.99
(19.93)
4300.00
(17.20)
4779.86
(9.15)
207.66
(10.20)
24,115.92
(15.92)
No. of
Issues
02
Merchant Banks
DSP Merrill Lynch
Amount
Average
No. of
Rs.
amount
Issues
Rs.
96.20
48.10
(19.08)
327.67
65.53
(11.01)
148.54
74.27
(5.98)
-
ABN Amro
Amount
Rs.
Average
amount
Rs.
-
02
62.51
125.02
(5.03)
-
227.45
05
54.13
02
834.02
209.97
1417.00
02
2051.32
01
02
1985.07
786.33
03
200.00
01
1075.00
05
2139.96
1593.29
03
2139.96
(8.56)
1265.40
(2.42)
-
878.50
(4.93)
316.55
(1.48)
407.49
(1.72)
300.00
(1.20)
-
878.50
1928.05
4102.63
(23.02)
3970.15
(18.52)
4665.47
(19.70)
4,309.83
(17.24)
4795.74
(9.13)
-
831.58
24
22,416.23
(14.81)
934
01
3,605.36
(2.38)
3,605.36
04
2027.56
(1.34)
506.89
1555.15
861.96
01
1598.58
316.55
407.49
-
Contd.......
86
Year
1997-98
No. of
Issues
03
1998-99
02
1999-00
01
10.81
10.81
09
2000-01
01
8.81
8.81
10
2001-02
01
2002-03
01
2003-04
06
316.56
(1.48)
549.53
(2.32)
996.14
(3.98)
3,620.57
(6.93)
5482.8
(3.62)
316.56
05
549.53
2,439.93
(11.38)
-
09
996.14
01
1685.71
13
1,206.86
04
2695.65
13
1096.56
09
1,685.71
(6.74)
10,782.62*
(20.6)
14,931.60
(9.86)
1659.07
72
2004-05
2005-06
01
2006-07
01
2007-08
03
2008-09
Total
05
Notes: -
Figures in parentheses show percentage of total amount mobilised through public issues of equity.
* This amount includes Rs. 3762.28 crore managed by Deutsche Equities, Rs. 2961.85 crore by UBS.
Securities Ltd, Rs. 2,515.62 crore by Goldman Sach( India) and Rs. 1,543.12 crore by Lehman Brothers.
Source: - Compiled from offer documents of companies, SEBI website and Prime Database Directories of relevant years.
87
Table 4.16
Indian Merchant Banks as Lead Managers in Right Issues
ICICI Securities
No. Of
Issues
Amount
1,037.55
(60.92)
148.03
(26.07)
52.48
(3.36)
Enam Securities
Average
amount
No. of
Issues
Amount
Average
amount
173.93
02
65.80
(3.86)
32.90
29.61
02
26.24
05
1997-98
06
1998-99
05
1999-00
02
2000-01
02
2001-02
01
2002-03
02
21.48
01
15.60
(3.61)
15.60
01
2003-04
02
50.97
02
2004-05
05
453.46
01
307.08
02
2005-06
02
63.19
02
131.50
01
2006-07
01
56.43
05
253.19
04
2007-08
02
183.82
02
2008-09
01
1,096.79
02
Total
28
196.14
15
42.95
(9.96)
101.95
(10.13)
2,267.30
(62.70)
126.38
(3.06)
56.43
366.17
(1,12)
1,096.79
(1.22)
5,296.03
(8.32)
307.08
(8.49)
263.00
(6.37)
1,265.93
(34.18)
397.98
(1.22)
1,163.92
(1.22)
3,479.31
(5.47)
04
581.96
01
231.95
25
72.30
(12.73)
542.56
(34.77)
290.95
(39.89)
51.03
(4.90)
33.71
(7.81)
36.83
(3.66)
177.12
(4.89)
44.57
(1.08)
484.75
(13.08)
2,587.83
(7.96)
1,459.14
(1.22)
5,780.79
(9.08)
36.15
108.51
145.48
51.03
01
7.65
7.65
33.71
01
18.41
01
88.56
44.57
02
397.01
(9.62)
198.50
121.18
217.09
(50.31)
196.73
(19.56)
217.09
196.73
3,347.26
(10.29)
646.96
1,459.14
231.23
11
4,444.14
(6.98)
404.01
Contd..... .
110
Year
IL&FS Investsmart
Lodha Capital
No. of
Issues
Amount
Average
amount
No. of
Issues
Amount
Average
amount
1997-98
01
4.33
4.33
1998-99
02
6.52
(1.14)
3.26
1999-00
02
10.07
5.03
01
2000-01
01
6.00
6.00
01
40.47
(5.55)
40.47
01
2001-02
01
46.80
8.03
01
199.77
23.00
01
199.77
(19.86)
213.85
(5.91)
213.85
02
26.67
02
34.64
05
2002-03
2003-04
04
2004-05
03
2005-06
06
2006-07
04
2007-08
03
2008-09
04
Total
31
46.80
(4.49)
32.14
(3.19)
69.04
(1.90)
160.08
(3.87)
138.57
(3.74)
37.56
139.11
(3.74)
650.22
(1.02)
78.23
(5.01)
41.80
(5.73)
78.23
41.80
62.66
01
59.19
(1.63)
59.19
67.85
301.49
(1.63)
60.30
03
179.22
(0.97)
59.74
125.32
(3.46)
135.70
(3.28)
12.52
34.78
03
20.97
05
711.93
(3.74)
1125.55
(1.77)
237.31
225.11
Contd.....
111
Year
No. of
Issues
112
No. of
Issues
40
20
21
23
08
11
19
22
32
34
24
19
273
Total
Amount
1,463.64
(85.95)
288.52
(50.84)
831.68
(53.30)
614.08
(84.19)
172.46
(16.57)
423.43
(98.19)
746.86
(74.26)
3,341.62
(92.41)
1,654.33
(40.10)
2,410.54
(65.09)
10,561.72
(32.48)
4,866.56
(38.56)
27,375.44
(434.03)
Average
amount
36.59
14.43
39.60
26.70
21.556
38.49
39.31
151.89
51.7
70.9
440.07
256.13
100.27
Table 4.16
Indian Merchant Banks as Lead Managers in Right Issues
ICICI Securities
No. Of
Issues
Amount
1,037.55
(60.92)
148.03
(26.07)
52.48
(3.36)
Enam Securities
Average
amount
No. of
Issues
Amount
Average
amount
173.93
02
65.80
(3.86)
32.90
29.61
02
26.24
05
1997-98
06
1998-99
05
1999-00
02
2000-01
02
2001-02
01
2002-03
02
21.48
01
15.60
(3.61)
15.60
01
2003-04
02
50.97
02
2004-05
05
453.46
01
307.08
02
2005-06
02
63.19
02
131.50
01
2006-07
01
56.43
05
253.19
04
2007-08
02
183.82
02
2008-09
01
1,096.79
02
Total
28
196.14
15
42.95
(9.96)
101.95
(10.13)
2,267.30
(62.70)
126.38
(3.06)
56.43
366.17
(1,12)
1,096.79
(1.22)
5,296.03
(8.32)
307.08
(8.49)
263.00
(6.37)
1,265.93
(34.18)
397.98
(1.22)
1,163.92
(1.22)
3,479.31
(5.47)
04
581.96
01
231.95
25
72.30
(12.73)
542.56
(34.77)
290.95
(39.89)
51.03
(4.90)
33.71
(7.81)
36.83
(3.66)
177.12
(4.89)
44.57
(1.08)
484.75
(13.08)
2,587.83
(7.96)
1,459.14
(1.22)
5,780.79
(9.08)
36.15
108.51
145.48
51.03
01
7.65
7.65
33.71
01
18.41
01
88.56
44.57
02
397.01
(9.62)
198.50
121.18
217.09
(50.31)
196.73
(19.56)
217.09
196.73
3,347.26
(10.29)
646.96
1,459.14
231.23
11
4,444.14
(6.98)
404.01
Contd..... .
110
Year
IL&FS Investsmart
Lodha Capital
No. of
Issues
Amount
Average
amount
No. of
Issues
Amount
Average
amount
1997-98
01
4.33
4.33
1998-99
02
6.52
(1.14)
3.26
1999-00
02
10.07
5.03
01
2000-01
01
6.00
6.00
01
40.47
(5.55)
40.47
01
2001-02
01
46.80
8.03
01
199.77
23.00
01
199.77
(19.86)
213.85
(5.91)
213.85
02
26.67
02
34.64
05
2002-03
2003-04
04
2004-05
03
2005-06
06
2006-07
04
2007-08
03
2008-09
04
Total
31
46.80
(4.49)
32.14
(3.19)
69.04
(1.90)
160.08
(3.87)
138.57
(3.74)
37.56
139.11
(3.74)
650.22
(1.02)
78.23
(5.01)
41.80
(5.73)
78.23
41.80
62.66
01
59.19
(1.63)
59.19
67.85
301.49
(1.63)
60.30
03
179.22
(0.97)
59.74
125.32
(3.46)
135.70
(3.28)
12.52
34.78
03
20.97
05
711.93
(3.74)
1125.55
(1.77)
237.31
225.11
Contd.....
111
Year
No. of
Issues
112
No. of
Issues
40
20
21
23
08
11
19
22
32
34
24
19
273
Total
Amount
1,463.64
(85.95)
288.52
(50.84)
831.68
(53.30)
614.08
(84.19)
172.46
(16.57)
423.43
(98.19)
746.86
(74.26)
3,341.62
(92.41)
1,654.33
(40.10)
2,410.54
(65.09)
10,561.72
(32.48)
4,866.56
(38.56)
27,375.44
(434.03)
Average
amount
36.59
14.43
39.60
26.70
21.556
38.49
39.31
151.89
51.7
70.9
440.07
256.13
100.27
Table 4.17
Foreign Merchant Banks as Lead Managers in Rights Issues
(Amount in Rs. crore)
Merchant Banks
J M Morgan Stanley
Year
No.
of
Issues
Amount
84.18
(4.94)
13.25
(2.33)
187.86
(12.04)
Average
amount
No.
of
Issues
28.06
13.25
187.86
Amount
Average
amount
No.
of
Issues
Amount
Average
amount
16.57
59.52
(3.49)
59.52
9.84
78.36
Average
amount
No. of
Issues
116.47
119.76
90.93
Amount
49.71
(2.92)
9.84
(1.73)
156.72
(10.04)
Amount
Average
amount
No.
of
Issues
45.97
(2.70)
22.98
11.51
68.32
76.12
(4.87)
76.12
8.13
38.17
1998-99
1999-00
2000-01
2001-02
704.45
(67.65)
352.22
88.01
(8.85)
88.01
2002-03
7.83
7.83
2003-04
154.23
(15.33)
154.23
77.45
27.28
27.28
2004-05
8.83
47.82
2005-06
620.07
615.68
2006-07
671.79
207.05
2007-08
1,375.87
3,347
2008-09
159.94
Total
19
50.47
3,347.44
(10.29)
3,055.54
(24.20)
6,525.05
(10.25)
742.22
594.83
12
232.93
(41.04)
239.53
(15.35)
90.93
(12.46)
1,231.36
(29.84)
621.17
(16.77)
6,549.73
(20.14)
1,009.54
(8.00)
10,129.42
(15.92)
6,549.73
844.12
304.28
(1.65)
43.47
77.45
(7.70)
47.82
(1.32)
6,392.12
(19.65)
2,045.99
(16.21)
8,622.90
(13.55)
Note: - Figures in parentheses denote percentage of total amount mobilised through right issues
Source: - Compiled from Letters of offer of issuing companies, SEBI Websites and Prime database.
115
6,392.12
23.02
(4.05)
68.32
(4.38)
24.4
(3.34)
76.34
(7.33)
168.2
1
2,155.72
Total
Others
No.
of
Issues
1997-98
226.56
(6.26)
1,240.13
(30.05)
671.79
(18.14)
5,499.49
(16.91)
1,484.44
(11.76)
10,112.15
(15.89)
HSBC Securities
11
159.94
(1.27)
555.15
(0.87)
4
3,347.26
57
Amount
239.38
(14.05)
279.04
(49.16)
728.56
(46.70)
115.33
(15.81)
868.8
(83.43)
7.83
(1.81)
258.94
(23.03)
274.38
(7.59)
2,471.49
(59.90)
1,292.96
(34.91)
21,956.80
(67.52)
7,755.44
(61.44)
36,248.95
(56.97)
Average
amount
26.6
46.51
104.08
28.83
173.76
7.83
86.31
68.59
617.87
323.24
3,659.47
1,938.86
635.95