JM Financials states corporates looking for capital expansion

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JM Financials anticipates a bumper year for fundraising. Atul Mehra, MD, and Co-CEO, Investment Banking at JM Financials mentioned in an interview that the market is expected to gather momentum as the country is on the path of revival from the pandemic, and companies are queuing up for fundraising. He also added that though stressed assets will receive more attention, the M&A segment would also become active soon.

He mentioned that despite the uncertainty due to the pandemic, the capital market was active during the first half of FY21 in the investment banking sector. About 42 corporates raised Rs. 1.40 lakh crore from the market. Indian corporates received support from private equity firms as well, with an investment of Rs. 1.50 lakh crore. The value of M&A deals for the first half was Rs.3.46 lakh crore. In his view, consolidation is expected in some sectors on the M&A front. The financial services, IT, and the consumer remain as sweet spots for M&A. Sale of stressed assets will attract huge interest from financial and strategic investors.

Due to geopolitical tensions with China, the company expects a rise in investments from Japan and the US. The US is planning to move its supply chain out of China. A curb in the Chinese investments could affect many unicorns in India as they have investments from Chinese investors. It would impact follow-up funding.

Atul Mehra said that retail investor participation is critical for long-term capital market growth. Talking about fundraising by mid-and small-sized companies, he said that the stock market and investors are receptive to companies with strong fundamentals. Corporates offering cash flow visibility, a strong and resilient business model with a good track record, and solid corporate governance could effortlessly raise funds from the market, regardless of their size. Quoting the success of IPOs of small companies, he added that the market favors growth and realistic valuation.

According to Atul Mehra, manufacturing, consumer, healthcare, and pharmaceutical sectors will bounce back to normal faster. He added that Export-led IT and chemicals sectors would continue to give good returns in the coming quarters also. With the growth in the rural economy and record harvest in Rabi, agri- and farm-based companies are likely to do well. Talking about JM Financial’s investment banking activities, he said that in the current calendar year, the company worked with 29 capital markets and M&A transactions including are Rs. 53,000 crore rights issue of Reliance Industries, delisting of equity shares of Hexaware technologies, etc.

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