Bombay Stock Exchange’s (BSE) Sensitive Index (Sensex) has been range bound this year hovering around 17,000 - 20,000. However, 2010- 11 has been another record year for the Indian capital markets with 124 IPOs (Initial Public Offerings) and FPOs (Follow on Public Offerings) and 41 QIPs (Qualified Institutional Placements).

According to Bloomberg data, proceeds from fresh issues (IPOs) by Indian companies in 2010 surpassed even the levels reached in 2007. The Government made a strong mark on the markets, raising significant capital with string of IPOs and FPOs. Till March 2011, 124 IPOs had accounted for Rs. 51,000 crore (US$11.3 billion) in capital raised, averaging close to a billion dollar every month. This along with 41 QIPs that raised nearly Rs. 19,722 crore (US$4.3 billion) meant that Indian companies raised more than Rs. 70,000 crore (US$15.5 billion) in the 2010-2011 financial year.

Khaitan & Co., Managing Partner, Rabindra Jhunjhunwala speaking on the markets said, “The Indian markets have shown shades of recovery post the global recession. Indian companies have taken advantage of the pockets of recovery in the domestic markets”.

Apart from the Government companies and the engineering and real estate sectors, this year saw the emergence of other sectors in fund raising. Gold and fashion are the new sectors to watch out in 2011 with companies like Joyalukkas, TBZ, Ratanchand, Tara Jewels and fashion salon company promoted by Jawed Habib planning to raise capital. Gold loan company Muthoot Finance also joined the capital-raising spree with its Rs. 1,400 crore IPO (US$311 million).

Law Firm Rankings

Once again, Amarchand recorded the highest number of capital market mandates amongst Indian law firms, acting as legal advisor in 43 IPO / QIP transactions as compared to 67 transactions last year.

The primary driver of decline in mandates handled by Amarchand was the QIP market, as the number of QIP mandates decreased from 31 to 15. Overall, Amarchand continued to be the “go to” Indian firm for the issuers and the investment banks.

Bar & Bench spoke to the Capital Markets team at Amarchand’s Mumbai & Delhi offices

Indian Capital Markets in the post recessionary period

Cyril Shroff: From about April 2009, we have seen substantial activity in the capital markets. We have benefited from having the largest capital markets team across the country. We have large capital markets teams in our Mumbai, Delhi and Bangalore offices and a small team in Hyderabad. In fiscal year 2010 the focus was on companies which needed capital in the form of real estate companies and infrastructure companies and mainly in the form of QIP offerings. In fiscal year 2011 we have seen very large offerings from Government companies where mostly the Government has reduced its stake. This has had some impact on private sector offerings. Despite that we have acted on some of the largest and most interesting capital raising in India and involving India. These include acting for the company on

IDR issuance by Standard Chartered PLC, advising Essar Energy PLC in the listing of its oil and power assets on the London Stock Exchange (we were the only Indian advisors on one of the largest listings on the London Stock Exchange), advising the underwriters on India’s largest public offering ever of Coal India, advising the underwriters on the ADR

of MakeMyTrip Ltd. In addition, we also advised the Government and the issuer on large issues such as NTPC and Power Grid. On the private sector side, we advised on several transactions including the follow on public offering of Tata Steel Ltd. and QIPs by Tata Motors and Adani Enterprises Ltd.

Amarchand’s team - Has the capital market team increased in size and your recruitment plans for the year ahead.

Cyril Shroff: We are the market leaders in capital markets and in addition to two Managing Partners, we have three full time equity capital markets partners working out of Mumbai, Delhi and Bangalore offices. Our team includes nearly 60 lawyers who work on only equity capital markets. In addition, we have also added Niloufer Lam as a debt capital market partner and her team comprises of six lawyers. We see capital markets as a very focused area and will continue to recruit for this practice in the next few years.

Amarchand's strategy for 2011 - Targets set in terms of the number of transactions.

Cyril Shroff: Our strategy remains to do India’s largest and the most challenging capital markets transactions.  This has been evidenced by our involvement in Standard Chartered PLC IDR, the Coal India IPO, the IPO of Essar Energy PLC, etc.  We hope to retain our market share on large transactions and even on smaller ones where our role is to draft the entire document.  We believe this approach allows us to keep our team excited.  We are quite focused on this.  We think that new sectors such as consumer industry and interesting players in the financial services space will be approaching the market for funds in the coming years.  

Shardul Shroff: We have acted on all the important transactions where we would have liked to see our name. Given our relationships and our profile in this practice, we hope to continue this trend.

Yash J. Ashar: We hope to be part of the most interesting and challenging transactions in this space. The Standard Chartered IDR was a fantastic experience where the regulations were changing and we were working on new structures and documentation. Our efforts will be to continue to pitch for such transactions in the next few years.

Indian Law Firms: Rankings based on transaction value of more than US$ 100 Million

The average IPO size this year has been US$91 million (Rs. 411 crore). Since Coal India raised nearly 30 percent of the total funds raised this year, the average funds raised through the IPO would have fallen to US$64 million (Rs. 288 crore) per IPO, if not for the Coal India transaction. 

International Law Firms

In 2010-2011 year nearly 42 companies (33 per cent), planning to raise capital by way of an IPO and 24 companies (58 per cent) planning a QIP sought legal advice from foreign law firms. Foreign law firms continued to actively pursue mandates in India. On display were a wide range of strategies by law firms on issues such as marketing, professional fees and recruitment.

Aggressive pricing strategy led to DLA Piper emerging as the market leader (in terms of number of mandates). DLA also strengthened its team based in Singapore by hiring laterally and also seconding lawyers with experience of the Indian markets to Singapore. Biswajit Chaterjee,  Partner at DLA Piper spoke to Bar & Bench and said, “As a firm we have closely followed the Indian market in the last couple of years - there's a definite buoyancy and confidence among Indian corporates expanding globally across various sectors - including natural resources, manufacturing and services.” Commenting on their string of mandates Biswajit said, “The India focused capital markets team at DLA Piper was set up last year and we believe we have developed a strong profile within a relatively short period. Steve Peepels (head of the US Capital Markets - Asia) and I have both worked extensively in India.” 

The rest of the league table for the international law firms had the usual suspects, including Jones Day, Dorsey, Clifford Chance and Linklaters. Jones Day’s Manoj Bhargava based in Singapore leads the India capital markets practice at the US firm. Jones Day has been an active player in the Indian market over the last few years and continues to consistently get mandated on numerous deals. Reflecting on the last year Manoj said, “We advised on many successful offerings in 2010. The first quarter of 2011 has been somewhat choppy but the balance of the year promises to be better.” He added, “Our team continues to be busy and is engaged on offerings for issuers in a diverse range of sectors such as infrastructure, energy and power, real estate, finance, F&B and transportation, among others.”

Last year also saw Clifford Chance build on the momentum it had generated with the hiring of Rahul Guptan as Partner in their Singapore office. Law firms such as Linklaters and Latham were involved in interesting innovative Indian listings and in transactions involving Indian companies raising capital in the United States and the UK. Linklaters acted as the international counsel to the underwriters in the first-ever issuance of Indian Depository Receipts, which was undertaken by Standard Chartered. Standard Chartered became the first ever foreign company to list on the Indian stock exchanges. Despite the challenging international markets, there was renewed interest amongst Indian companies in listing securities outside India, with transactions such as Essar Energy’s listing on the London Stock Exchange and the NASDAQ listing by leading Indian travel portal, MakeMyTrip.com. Rajiv Gupta, Partner, Latham & Watkins commenting on this development said, “2010 saw the return of Indian companies' interest in U.S. listings after a gap of 3 years.  MakeMyTrip became the first Indian company to list in the U.S. in 2010 since Sterlite and Genpact's listing in the U.S. in 2007.  2011 has started on a slow note but should see continued interest in U.S. listings from Indian companies.”

Law Firm Rankings: Methodology

Parameters considered for rankings:

1) We have factored in all transactions where: (a) in case of an IPO, a company has filed the draft red herring prospectus, red herring prospectus or a prospectus with the SEBI; and (b) in case of a QIP, a company has filed a Placement Document with the stock exchanges between April 1, 2010 to March 31, 2011.

2) We would like to highlight that there are several instances where companies have filed their draft red herring prospectus with SEBI but have not yet raised capital from the market. We have included such transactions for the purposes of determining the rankings.

3) Please note this report is limited to only IPOs (including FPOs) and QIPs and does not cover other forms of capital raising. Please also note that this report does not include RHP filed with ROC for the financial year 2010-2011.