Capital Markets 2009-10 Indian Law Firm Rankings

Amarchand dominated the 2009-10 IPO-QIP transactions as the market bounced back in the later half of the fiscal year. A detailed ranking of law firms and conversations with capital market teams. This story is an excerpt of the detailed PDF report. To download click here..Capital markets in India have been a reflection of the country’s economic growth and development over the last two decades. Bombay Stock Exchange’s sensitivity index, the Sensex, has become the barometer of the Indian market. Several reports have been published by leading international agencies on the potential scope of the Indian capital markets, usually referencing the expectation that the Sensex will cross the 20,000-point threshold by November this year. All these reports have one thing in common – the Sensex is headed upwards and sky is the limit..In the recession year of April 2008 – March 2009, only 21 companies were able to raise Rs. 2,271 crore ($510 million). However, fiscal year 2010 was a year where markets put the worst behind them and posted a strong growth. As the confidence in the market grew so did the capital raising activities. 108 companies filed the draft red herring prospectus (DRHP) with the Securities Exchange Board of India (SEBI). SEBI’s Capital Market report of March 2010 states that of the 108 companies that approached SEBI, 38 companies have successfully raised capital with 34 companies going public and 4 companies undertaking follow-on public offers (FPO) to raise approximately Rs. 37,125 crore ($ 8.25 billion). The Qualified Institutional Placement (QIP) market was also very active with 58 companies raising approximately Rs. 41,133 crore ($ 9.14 billion). The first quarter of calendar year 2010 has already resulted in 20 successful IPOs, with India witnessing the third largest number of IPOs after US and China, based on the findings in a recent Ernst & Young report..With such an active market, lawyers were kept busy and the capital markets teams were back in action. Companies were keen to raise capital in some form or another and bankers were keen to get the deal flow rolling. This desire for activity gave rise to the QIP as a preferred mode of raising capital. Vandana Shroff, Partner, Amarchand, says “India’s growth story is well documented. Being a capital deficient country, there will continue to be a need to raise large pools of capital which can be fulfilled by approaching the capital markets in India and internationally, provided that we do see some length of stability of the international capital markets”..Bar & Bench analyses the legal side of the Indian capital markets practice and provides a set of rankings of the Indian law firms which have advised the companies and the underwriters in the capital raising process..Rankings.Amarchand recorded the highest number of capital market transactions and was ahead of all other law firms as it acted as the legal advisor in 67 IPO / QIP transactions. Amarchand’s capital markets practice is headed by Managing Partner of the Mumbai office, Cyril Shroff who is assisted by Partners, Yash Ashar in Mumbai, Arjun Lall in Bangalore and Prashant Gupta in Delhi. Amarchand’s tally of 67 transactions was way ahead of Khaitan & Co’s (Khaitan) 22 transactions and Luthra’s 20 transactions..It is no surprise that Amarchand has the largest capital markets team in India comprising 57 lawyers exclusively focused on capital markets. Of these 57 lawyers, 25 are based in Mumbai, 15 in Delhi, 12 in Bangalore and 5 in Hyderabad..Amarchand’s capital market transactions in number and value encompassed a healthy mix of sectors with good representations from banking and finance, Government, energy, real estate and infrastructure. While Amarchand completed 3 large government public offerings (NTPC, NHPC and Oil India), it was also involved in high profile and large transactions of private companies such as Jindal Power, SKS Microfinance, Reliance Infratel and JSW Energy, each of which has either raised or proposes to raise capital in excess of Rs. 2,700 crore ($500 million)..Table No. 1: Indian Law Firms – Top Firms*. RankFirmIPOQIPTotalCompany MandatesUnderwritersMandatesCompany MandatesUnderwritersMandates1Amarchand288256672Khaitan9472223Luthra7823204AZB3544165Crawford Bayley10–41156S & R1722127J. Sagar & Associates3251118Rajani Associates6–3–99Kanga & Co3–1–49Trilegal2–1149Vaish Associates4–––4.*These rankings are based on the total number of mandates inclusive of IPO and QIP transactions for the fiscal year 2009-10. **For a list of Indian law firms outside the Top Firms please see the detailed PDF report..Graphical Representation of Top Firms.As the fund raising statistics show, 73% of the capital raising transactions were concluded by 7 law firms in terms of number of transactions. 22 law firms advised only a single capital market transaction while 7 law firms had double-digit transactions. For details see Table No. 1 and Table No. 5 of the detailed PDF report..Luthra and Khaitan have also raised the bar and have aggressively expanded their teams as well as number of transactions over the last few years. After several years at Amarchand, Madhurima Mukherjee (pictured) joined Luthra to set up its capital markets practice. Luthra has also managed to capture some of the high profile capital market transactions last year. Madhurima, Partner and Head of Capital Market practice, who built this practice over the last four years at Luthra, says “we have concentrated our energies on building the team as quality legal advice, personalized attention and a professional approach was the only thing that we had on offer”..Amarchand and Luthra have managed to bag key roles in almost all significant capital market transactions. The Government of India, which was the most active player in the capital markets, has managed to raise about Rs. 30,000 crore ($6.6 billion) benefiting Amarchand and Luthra. Luthra bagged key roles alongside Amarchand in the NTPC, Oil India and Rural Electrification public offers. On account of its sheer size and experience, Amarchand has emerged as a clear leader in terms of both in terms of number of transactions and value of the transactions (see Table Nos. 1 and 5 of the detailed PDF report). Although the team at Luthra is less than half the size of Amarchand’s team with 20 lawyers, it has also gained market share with a good mix of transactions. There are several reasons for Luthra’s growth this year. Seen as a Delhi firm till a few years back, Luthra has now emerged as a true national player with the strengthening of its Mumbai and Bangalore offices. Luthra beefed up its capital markets practice with the hire of Manan Lahoty to head its Mumbai capital markets practice to work closely with Madhurima in Delhi. “Whether out of Delhi or Mumbai the entire team and our client advisory is seamless and consistent. Our mantra is timely advice and partner level attention for every client” adds Manan..“If you pick any Luthra lawyer in the capital markets team today, you will find that we offer a degree of care and dedication and because of this team we have managed to achieve a reputation within 4 years with a recession in between” says Madhurima. The other reason for Luthra’s growth is “sheer partner level attention for every client. We see it as building a relationship and an investment in every client. Manan and I go through every single document and not just a few sections of the IPO document. This is very important”..Khaitan had a very aggressive 2009-10, bagging several IPO representations across sectors and segments. Ranked below Amarchand in terms of the number of transactions, Khaitan has benefited by leveraging its multi-city presence under the strong leadership of Rabindra Jhunjhunwala..AZB and S&R concluded fewer but equally high profile transactions as compared to Amarchand and Luthra. AZB also benefited from the number of real estate companies raising capital and were involved in 5 out of the 7 large real estate transactions. AZB, like Amarchand, has built strong teams in both Mumbai and Bangalore..S&R, a niche capital markets firm, has some high profile companies in its resume including Sterlite Energy, SKS Microfinance and NMDC. Notably S&R has been the underwriters ‘go to counsel’, as they represented the underwriters in 9 out of the 12 transactions in which they were involved..Crawford Bayley has been predominantly involved in capital raisings by mid-cap and small-cap companies, apart from the NMDC IPO, which was the largest IPO in 2009-10. Crawford Bayley advised mid-cap companies like Talwalkers, which raised about Rs. 75 crore ($ 16 million) and had 10 such IPO transactions to its account..Rajani Associates (Rajani) has bulked up its capital markets practice in the last few years. Rajani has advised on nearly 91 IPOs from early 2004 when it set up the capital markets practice. Sanjay Asrani and Sangeeta Lakhi (pictured) are the two partners who have built the capital markets practice. Sangeeta Lakhi says “Indian companies are always looking at raising capital and the story will be intact for a few decades at least. We focus on midcap companies, a good opportunity for a firm of our size. We have a dedicated capital markets practice and have done varied transactions with most mid-cap companies”. Sangeeta’s team consists of 12 lawyers dedicated to capital markets transactions and she says her team has done well even in the recession years..The fee structure seems to be a concern in the mid-cap segment, which Sangeeta is quick to admit. There are severe pricing pressures when it comes to mid-cap companies trying to raise capital. We sometimes are forced to turn down some representations, as they do not make economic sense. She said “the foreign law firms have also faced similar pricing pressures. Some of the foreign law firms have told us that it is very difficult to work with Indian companies as they negotiate hard and pay late!”.However, the start up story of Delhi based Axon & Partners (Axon) offers hope for newcomers. Axon, started in 2009, already has landed 2 QIP transactions with around 5 other related capital market transactions in the pipeline. Axon has team has been quite busy and has advised on complex and large IPOs such as the United Bank of India IPO. Co-Founder Abhimanyu Bhandari (pictured) said, “we are a start-up, but we have the skill and good quality lawyers from the country’s top law firms. We want to be small, niche and profitable for our fee earners”. Abhimanyu further added “unlike the West, we have a handful of law firms that have a monopoly over the market. The landscape of capital markets is changing with most issues not warranting an international legal counsel (ILC) as most of them are cost sensitive. Also the fact that most issues need not raise money from the outside market, when issues are fully subscribed in India”. This statement partly holds good. Of 108 IPOs, which have raised or are planning to raise capital, only 44 companies had ILCs, while most of them had only one domestic counsel..Top 25 IPOs – 2009-10 .Bar & Bench also examined the quantum of capital raised or proposed to be raised as an indicator of the profile of the transaction. Since there were 166 IPO / QIP transactions, we decided to close in on the top 25 IPOs and leave out the QIPs, as the capital raised through most of the QIPs were in the Rs. 450 crore ($100 million) to Rs. 900 crore ($200 million) range and very few QIPs outside this range. Companies and underwriters often use experienced law firms based on the quantum of capital to be raised. In most cases it is appropriate to assume that the profile of the transaction is directly proportional to the quantum of capital to be raised. This ensures that companies and underwriters engage leading capital market experts and law firms to ensure that their transaction sails through the regulatory maze..Bar & Bench analyzed top 25 IPOs that either raised capital or filed their DRHP in anticipation of raising capital in the fiscal year 2009-10..Amarchand continued its dominance with 18 out of the top 25 IPOs, most of them through company mandates. Luthra managed 5 underwriter representations with a total tally of 7 IPO transactions. IPOs by Real Estate companies most of which are yet to raise capital gave AZB the third spot. The underwriters helped S & R to secure the fourth position. Khaitan, which had a mixed profile of transactions, was in the fifth spot..Table No. 2 ranks the law firms based on the Top 25 IPOs. A detail list of top 25 IPOs is listed in Table No. 3..Table No. 2: Indian Law Firms: Rankings based on top 25 IPOs in terms of transaction value. FirmIPOTotalCompany MandatesUnderwriters MandatesAmarchand15318Luthra257AZB246S & R145Khaitan–44Crawford Bayley2–2J. Sagar Associates112Axon–11Dua Associates–11Fox Mandal1–1Wadia Ghandy1–1.Table No. 3: Top 25 IPOs. CompanyCompany AdvisorsUnderwriters – Domestic AdvisorUnderwriters – International Advisor$ (In million) *NMDC LimitedCrawford BayleyS & RDorsey & Whitney2,667Jindal Power LimitedAmarchandKhaitanLatham & Watkins1,600NHPC LimitedAmarchand–Dorsey & Whitney1,342NTPC LimitedAmarchandLuthraO’ Melveny & Myers1,193Sterlite Energy LimitedAmarchandS & RLatham & Watkins1,133Reliance Infra Tel LimitedAmarchandKhaitanLinklaters1,111Emaar MGF Land LimitedS & RDua AssociatesLinklaters856Gujarat State Petroleum Services LimitedAmarchandJ. Sagar AssociatesJones Day778Sahara Prime City LimitedAmarchandLuthraMilbank Tweed Hadley McCloy667Lodha Developers LimitedWadia GhandyAmarchandLinklaters667Oil India LimitedAmarchandLuthraAshurst617JSW Energy LimitedAmarchandKhaitanLatham & Watkins600Jaypee Infratech LimitedCrawford BayleyLuthraSkadden, Arps, Slate, Meagher & Flom502Adani Power LimitedAmarchandKhaitanJones Day489Indiabulls Power LimitedAmarchand–Clifford Chance391Rural Electrification Corporation LimitedLuthraAmarchandAshurst364BPTP LimitedAZBLuthraLatham & Watkins333DB Realty LimitedLuthraAZBJones Day333Ambience LimitedAmarchandAZBDorsey & Whitney288Avantha Power & Infrastructure LimitedAmarchandAxon PartnersDorsey & Whitney278Oberoi Realty LimitedAmarchandAZBShearman & Sterling267SJVN LimitedFox MandalAZBK&L Gates267Prestige Estates Projects LimitedAZBAmarchandClifford Chance267SKS Microfinance LimitedAmarchandS & RWilson Sonsini Goodrich & Rosati250Pipavav Shipyard LimitedJ. Sagar AssociatesS & RDorsey & Whitney178.*Capital raised or proposed to be raised has been sourced from publicly available information and company reports.Methodology. Parameters considered for rankings:.We have factored in all transactions where: (a) in case of an IPO, the Company has filed the draft red herring prospectus, red herring prospectus or the prospectus with the SEBI; and (b) in case of a QIP, the Company has filed a Placement Document with the stock exchanges between April 1, 2009 to March 31, 2010.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.Please note this report is limited to only IPOs (including FPOs) and QIPs and does not cover other forms of capital raising