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This article, like many others, was first published exclusively for long-term supporters, 4300 hours before everyone else got to read it.

InLegal 50: Top of Equity Capital Markets

IPOs per domestic firm in the 2018-19 financial year
IPOs per domestic firm in the 2018-19 financial year

Equity capital markets (CM) can be a tough practice area for a law firm to manage. When the going is good and the markets are booming, it seems like there aren’t enough lawyers to handle the work; when the capital markets go to sleep, utilisation and profits plummet.

On top of that, no Marquee Corporate Firm worth its salt (see previous section) can afford to ignore a capital markets practice or keeping at least a finger on the pulse: an initial public offering (IPO) and other capital markets work are fantastic opportunities for law firms to forge deep, long-lasting bonds with clients, and many of the biggest listed companies will be comforted in being able to access capital markets expertise via their top legal advisers.

M&A and investments may have had a great financial year to 31 March 2019, but equity and debt liquidity had all but dried up over the same period. Things had begun promisingly in early 2018, but after 1 April the market slowed down and by 28 September 2018, Dinesh Engineers brought the market to a crashing halt. Its IPO had hoped to raise Rs 185 crore, but was pulled due to “current volatility in the market”.

The markets picked up again slightly at the beginning of the 2019 financial year, with a few companies hoping to slip into the brief window before the national elections, though overall the outlook was nearly as bad as it gets.

“The broader capital markets have been listless in the last year or so,” explains former L&L Partners capital markets star Manan Lahoty. “The deal-making in the primary market has been sluggish, with a far lesser number of DRHPs [draft red herring prospectus] as well as closed IPOs and QIPs [qualified institutional placements].”

“In such times, the focus is more on promoters recapitalising the companies through a rights issue, or consolidating their stakes through a buy-back,” adds Lahoty.

Note: The interview was carried out before https://www.legallyindia.com/lawfirms/manan-lahoty-team-of-17-commence-cm-at-indus-where-clients-considering-ipos-post-complex-transition-20191010-10925 Lahoty had joined IndusLaw;;.

Are there alternatives?

Apart from IPOs and QIPs, there is not much else to for capital markets lawyers to really sink their teeth into.

Equity rights issues are often not the most interesting, from a hungry capital markets lawyers’ perspective: some of the larger issuers don’t even need to file new prospectuses and legal advice will be limited.

Debt deals too require much less work than equity, and the fees can be far lower. For a debt IPO, lawyers are usually paid around 20% of what would usually be paid for an equity IPO, according to several lawyers we spoke to, and fees for private placements of debt can be as low as 10% of equity IPO fees. Debt capital markets work often doesn’t involve foreign law firms and in many cases is handled by firms’ finance practices, rather than capital markets teams.

The biggest IPOs of 2018-19
The biggest IPOs of 2018-19

The Capital Markets Marquee Firms

The numbers bear this out: in the 2017 calendar year we had reported 60 DRHPs, with four law firms picking up more than 10 mandates each.

This last financial year was a different story, with only 14 red herring prospectuses (RHPs) filed with the National Stock Exchange and completed. Out of those, the top four firms barely managed to bag roles on four completed IPOs each.

We have defined the IPO top tier, doldrums notwithstanding, by the number of IPOs that raised more than Rs 1,000 crore ($144m).

Khaitan & Co (which has India’s largest capital markets practice, having grown it massively until 2017), Shardul Amarchand Mangaldas (SAM), Cyril Amarchand Mangaldas (CAM) and L&L Partners all tied for the lead of the market, with four IPOs each, with total values of at least Rs 5,000 crores in each case.

Khaitan and SAM led marginally according to our metrics, with each of their four IPOs having raised more than Rs 1,000. CAM and L&L were barely behind, with three of their four IPOs having met that mark.

AZB & Partners had advised on three IPOs, of which all were Rs 1,000 cr deals. J Sagar Associates (JSA) scored three IPOs, with total values of Rs 2,000 cr, though only one of these was a Rs 1,000 cr+ affair. Prestige Corporate Firm S&R Associates can still count itself amongst the true blue Capital Market Marquee Firms, having scored one mandate advising the banks on the Indostar Capital Finance Rs 1,800 cr IPO.

The only Marquee Corporate Firm missing from the IPO list was Trilegal.

The Mid-Tier Capital Markets Specialists (and three newcomers)

Crawford Bayley seems to have redeveloped its appetite for (limited) IPOs, after it had almost disappeared from the IPO landscape in 2017 when it had handled only two mandates (12 fewer than in 2016).

Capital markets boutique Verist Law, headed by Srishti Ojha, acted on one Rs 431 crore IPO, while regular capital markets contender Kanga & Co bagged one mandate.

Three newcomers try out IPOs

In the last financial year, it had acted on four mandates, though none were over Rs 1,000 cr in value.

Also encouraging was the emergence of DSK Legal and SNG & Partners, which had not featured in our IPO league table last year, and advised issuers on two mandates each.

Link Legal India Law Services was another new name in IPOs this year and advised on one IPO for the banks.

Wadia Ghandy and Nishith Desai Associates, while not having a specialist IPO practice as such, each scored one big IPO advising the seller shareholders, capitalising on their links to venture capital and private equity house-clients.

Foreign ECM firms

Top foreign IPO law firms in 2018-19
Top foreign IPO law firms in 2018-19

The view from abroad has been similarly stagnant, though Sidley Austin this year again picked up the most mandates, having acted on five Indian IPOs for the lead bankers (of which four were Rs 1,000 cr+ affairs).

Clifford Chance scored three mandates for banks (of which two were in the Rs 1,000 cr+ bracket), and Latham & Watkins found work on two deals for banks (one had values of over Rs 1,000 cr).

Sidleys Singapore partner Manoj Bhargava comments: “The volatile markets made institutional investors very selective – while several IPOs, QIPs and rights offerings closed and were over-subscribed, a number of them were also deferred. The demand for capital continues and has increased in 2019 but we’ve seen completed offerings only in a limited number of sectors in the past year or so.”

The smaller end of the IPO market also saw two international newcomers: Riker Danzig’s New York office and Perkins Coie in Dallas each scored two foreign law firm mandates for issuers.

Regular IPO advisers Duane Morris & Selvam and Squire Patton Boggs picked up one IPO each for banks.


Having had a fair amount of rest seems to have recharged capital market lawyers’ batteries, and most are optimistic about what this year holds.

Sidleys capital markets partner Ankit Kashyap says: “We expect that after the general elections there will be an increase in ECM activity given there is a significant backlog of deals which have already received SEBI approvals and are awaiting less choppy waters for their launch.”

“We are seeing a much stronger deal flow for new listings and QIPs,” adds Lahoty.

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