Citigroup cemented its leadership in the Indian equity capital market in 2018 with an unrivalled book of business despite challenging market conditions.
After a blockbuster 2017, concerns over the falling rupee and regulatory restrictions over mutual fund investments in mid-cap companies turned investors – especially foreigners – wary on Indian equities early in 2018. A liquidity crisis at consumer and housing finance companies in the second half also rattled markets.
Against this backdrop, Citigroup used its deep industry knowledge and broad client coverage to guide transactions through the turbulence.
On the IPO front, Citigroup had a hand in some of the leading issues of the year, including the Rs28bn (US$396m) float of HDFC AMC – one of the best performing IPOs of the year – and the offerings of L&T IDPL, ICICI Securities, Varroc Engineering, TCNS Clothing and Aavas Financiers.
The Rs17bn IPO of housing finance company Aavas in September was especially challenging. The float coincided with a sharp sell-off in Indian non-bank finance companies, following the default of Infrastructure Leasing & Financial Services, and the IPO was priced at a premium of around 33% to other listed housing finance companies on a price-to-book valuation. Although the IPO was only 97% subscribed, Citigroup ensured that the deal held together by keeping institutional investors engaged, both in the bookbuild and anchor tranches.
L&T IDPL’s IndInfravit Trust, meanwhile, was the country’s first infrastructure investment trust to list through a private placement, bringing in Rs32bn, in an alternative to the underperforming public markets.
Having managed six out of the eight block trades launched in the awards period, Citigroup continued to maintain its lead in the overnight block business with tight pricing and bold commitments.
Three of the six deals, in Mahanagar Gas, L&T Finance Holdings and Hexaware, were done on a sole book basis.
The biggest block of the year in India was Tata Sons’ Rs90bn sell-down in its flagship Tata Consultancy Services. Citigroup, one of the two bookrunners, helped build momentum by garnering early demand from local and foreign institutional investors. Tata Sons eventually increased the deal by 11% on the back of solid demand.
The Rs35bn qualified institutional placement of Idea Cellular also demonstrated Citigroup’s ability to help its clients navigate difficult times. Intense competition had hit the earnings of all Indian telecom companies, but Idea Cellular was keen to raise capital before its planned merger with the Vodafone group. It had contemplated a rights offer, before taking Citigroup’s advice of an institutional placement. Idea went on to raise Rs35bn after a strong response allowed it to exercise an upsize option in full.