Investment banking trends: the year 2022 could create new business opportunities with higher growth expectations

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The year 2021 has turned out to be a rich year for investment bankers with unprecedented opportunities emerging across various verticals in finance and investment.

By Jyoti Prakash Gadia

The year 2021 has turned out to be a rich year for investment bankers with unprecedented opportunities emerging across various verticals in finance and investment.

Despite the hidden shadow of the omicron variant and the possibility of a third wave, the year 2022 should hopefully be more eventful and create new business opportunities for investment bankers following a turnaround. and a continued recovery in affected sectors and an expected higher growth path.

New opportunities have arisen due to the new normal created by the covid-19 pandemic, the spirit of resilience created in the ecosystem by different stakeholders including government, RBI and companies in certain sectors. . The need for digitization and e-commerce has created a new set of activities and use of technology in various sectors of the economy. Health, pharmacy and education have emerged as the need of the hour creating demand in these sectors. The government has also put in place enabling policies and reforms for growth in various sectors.

In the context of investment banking, all verticals in the ecosystem like IPos, mergers and mergers, private equity has gained momentum and experienced unprecedented growth.

IPO

Indian startups raised nearly $ 39 billion in 2020-2021, more than twice the size of the previous year. This has happened in various industries such as IT aggregators, financial services, retail, education, and pharmacy. India has the competitive advantage of having achieved great success in the field of software and their further use in digitization and all other related industries is a logical opportunity for entrepreneurs.

The unrealized potential is available in industries such as FinTech, PLI system manufacturing and retail, in addition to the life insurance company’s mega IPO likely to take place in 2022.

Mergers and mergers

This mechanism also emerged as a major avenue for investment activity. More than 190 cases of mergers and mergers of various sizes were reported in 2021 compared to around 80 cases the year before. Large companies like Tata, Reliance, Adani have shown their interest in the field of retail, pharmacy and renewable energies with the acquisition of a number of entities. Companies like the one in Byju have set new standards in education, fostering the emergence of new opportunities in this sector.

Economies of scale, profitability and improved profitability Capacity is the main driver of M&A activity. With the further opening of the economy, reforms and the benefit of new programs, established players are sure to be swift and create space for mergers and acquisitions during the year. also to come.

Capital investment

With the resilience and revival capacity of the Indian economy after the second wave of covid 19, private equity players have shown their confidence in the history of our country’s economic growth. The large number of private equity funds – venture capital funds have shown particular interest in the renewable energy / infrastructure field as a whole, as well as in emerging areas such as IT services and pharmacy, with the deployment of more than US $ 50 billion. Real estate is a sector through the Reits in which foreign players plan to make a remarkable entrance. All of this bodes well for the private equity vertical with attractive government initiatives / measures in the area of ​​FDI.

NMP

The government also got the ball rolling by announcing the national plan to monetize Rs 6 crore lac in various infrastructure sectors. It will also attract large-scale investment and involves mechanisms such as direct assignment / transfer on lease and INVITs. Working on an Invites mutual fund mechanism has proven successful in the road / power sector, and also involves the participation of smaller investors.

Ultimately, success stories can be created with small to medium scale mass investors to attract for all productive avenues of investment and investment bankers have an important role in creating an ecosystem as well. robust and prosperous

Caution note

Any unfavorable change in events due to the third wave of covid 19 can dampen feelings and impact the exuberance of the investment scenario. We need to be careful and work in a planned way to create sustainable mechanisms as catalysts for growth. Needless to say, realistic valuations are the fundamental stressor and prices must be rational in order to avoid volatility and uncertainty.

(Jyoti Prakash Gadia, Managing Director, Resurgent India. The views expressed are those of the author.)

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