MUMBAI: Foreign and domestic investment banks are increasingly setting up dedicated teams to cater to India’s rapidly growing e-commerce companies, many of which are expected to go public in the near future. London-based Investec and local players Kotak Mahindra Capital, Axis Capital, Edelweiss Financial Services, Motilal Oswal Financial Services, Avendus Capital and Equirus Capital are among investment banks and advisory firms that have already set up digital media verticals and some of them are busy adding more people to this team. “Our internet story is experiencing rapid growth aided by unprecedented global investor interest in what can safely be called the most buoyant part of the Indian economy,” said Aashish Bhinde, executive director and digital & technology head at Avendus Capital. He expects Indian internet businesses to have a market value of $300 billion, or about Rs 19,00,000 crore, by 2020. “A $300-billion market value in five years might appear overtly optimistic to some, but it would still be about 10% of India’s estimated $3-trillion stock market capitalisation by the year 2020,” Bhinde said. Avendus, which has advised several consumer internet brands including Bookmyshow, Quikr, Redbus, Housing, Taxiforsure and freecharge, has a 16-person team and is in the process of hiring more. “With so much achieved and so much untapped potential still existing, it is but natural that firms will set up dedicated teams for these businesses,” Bhinde said. He expects India to go China’s way which already has 27 internet companies listed on US bourses and four on the Hong Kong exchange. E-commerce and affiliated sectors (logistics, payments, digital marketing, etc.) have seen unparalleled interest in the past 12 to 18 months, attracting entrepreneurs, customers and investors, offering tremendous opportunity to investment banks and boutique advisory firms to assist and service this ecosystem. Investec, a global specialist bank with a strong focus on digital media, has set up a dedicated team focused on the Indian digital sphere in the last year or two. “We bring global reach and expertise as well as a local presence with a full subsidiary and corporate financiers situated in Mumbai,” said Devin Kohli, digital media and technology head, Asian corporate advisory, at the firm. Investec has advised Quikr, Pepperfry and Bigbasket amongst others on their fund raising and advised Interactive Avenues, India’s largest digital advertising agency, on its sale to IPG, Kohli said. While fund raising through private pools of capital have so far dominated the e-commerce space, bankers feel some of these companies may look at listing in local stock markets even as the market regulator, Sebi, is planning to ease listing norms for them. “We have started engaging a lot more with e-commerce companies as we believe they will require latestage funding,” said Vikas Khemani, president & co-head, wholesale capital markets at Edelweiss. The firm has increased the headcount of its technology team to eight from three last year. Every month, it receives about eight to 10 proposals from e-commerce companies seeking advice on fund raising and M&As. Local investment bank Axis Capital, owned by India’s third-largest private bank by assets, has also allocated more resources to build the digital & technology team, though it believes such firms are attractive to venture and private equity funds. “We are engaging with these companies to help them raise money from the public markets and strategic investors as and when they are ready,” said Dharmesh Mehta, managing director and chief executive at Axis Capital. Banks are also spending time and effort in training talent. “Since this industry itself is very young, one has to spend considerable time and effort in training talent. There is no readymade pool of Investment bankers for this sector in India,” said Bhinde of Avendus. He said that when Avendus started this vertical in 2011 there was minimal awareness of the digital space in India and zero research. “Our team met most of the companies, researched growth in China and other developing markets, and subsequently published the ‘India Goes Digital’ report in November that year. This was probably the first attempt to map this industry in India,” Bhinde said.
Source:: ET-GST
