India equity house

IFR Asia Awards 2014
3 min read
S Anuradha

India’s equity markets hit new heights in the second half of 2014, but it was JP Morgan’s ability to raise funds for issuers across multiple sectors throughout the year that shone through.

JP Morgan worked with clients in both the public and private sectors, and at home and abroad, helping to reopen the equity markets for highly geared companies from the telecom and infrastructure sector following Narendra Modi’s May election victory.

The bank was involved in a number of key deals in the earlier part of the year, when conditions were far more challenging. It handled State Bank of India’s US$1.3bn qualified institutional placement, the country’s largest such issue, in January, and arranged Make My Trip’s follow-on offering in March, the first major US offering from an Indian tech company since 2010.

JP Morgan was also one of the bookrunners on the Rs55bn (US$887m) overnight block in Axis Bank in March. It was the largest Indian block during IFR’s review period and, more importantly, the first time the government had sold down its stake in the lender.

The trade had some challenges from the outset. It came at a surprising time, just weeks away from the Indian general elections, and with foreign ownership already testing the regulatory limit. Fears of further sales from the government, which still holds an 11.66% stake in the bank after the disposal, also made investors wary.

The issue, however, succeeded with the help of anchor investors at a tight discount of 3.1%, and the bank’s shares have performed well in the secondary market.

After Modi’s victory sparked a sustained rally in Indian equities, JP Morgan was quick to spot opportunities for its clients.

The Rs48bn (US$800m) qualified institutional placement of debt-ridden Reliance Communications, in June is the best example. The company, which had been unsuccessful at previous attempts to raise capital, originally planned to raise only US$300m–$400m from the placement, but the larger deal size and a concurrent Rs13bn injection from the promoters helped convince some key investors that the fundraising would make a difference to the debt burden.

Notably, only 9% of the shares went to Indian investors, in contrast to the typical 60% plus in other QIPs. JP Morgan was joint global co-ordinator.

GMR Infrastructure used a similar structure for its Rs15bn placement the following month, with the promoters subscribing to new shares alongside the institutional placement. JP Morgan was again one of the bookrunners.

JP Morgan was not only involved in transactions, which leveraged on its global network, it was also the bookrunner on IDFC’s Rs10bn placement, which could be sold only to domestic investors.

To see the digital version of this report, please click here.