Latest landscape of Investment Banking in India and Globally – Bizemag Editor met Mr. Manoj Aggarwal, Managing DIrector of iAcuire Consulting LLP, a boutique investment banking firm. Here is the brief of his interaction with Bizemag Editor
1- What kind of transactions handled by firm like yourself.
Answer: We at iAcuire Consulting LLP provide all kinds of financial advisory and consulting. We specialize in cross-border mergers and acquisitions however we also offer investments to startups from VCs and funding for private companies from PE players globally. We work both on the sell and buy side.
2- What are the major drivers behind the growth of the investment banking sector in India and globally?
Answer: The growth of the investment banking sector in India and globally is driven by several factors. Increasing globalization and cross-border transactions are creating greater demand for investment banking services. Economic growth and development contribute to the need for capital and investment opportunities. Technological advancements and digital transformation are increasing efficiency and providing innovative solutions. Regulatory reforms and policy changes promote transparency and stability. The emergence of new financial instruments expands the scope of services. Improved financial literacy and investor awareness are increasing the demand. Strong relationships with corporate clients foster trust and collaboration. Together, these factors are driving the growth and success of the investment banking sector both in India and globally.
3- How does the regulatory environment impact investment banking activities in India and globally?
Answer: The regulatory environment has a significant impact on investment banking activities in India and globally. Regulations serve to ensure transparency, protect investors and maintain stability in financial markets. In India, regulators such as the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) enforce rules and guidelines to govern investment banking activities. These regulations affect aspects such as capital requirements, disclosure norms, licensing procedures and risk management practices. Compliance with regulatory requirements is critical for investment banks to operate legally and maintain the trust of clients and stakeholders. Globally, regulatory frameworks such as Basel III and the Dodd-Frank Act also play an important role in shaping investment banking practices and mitigating systemic risks. The regulatory environment therefore sets the parameters within which investment banking activities take place and ensures integrity, stability and investor protection.
4- What are some recent trends in mergers and acquisitions (M&A) in India and globally?
Answer: In recent years, mergers and acquisitions (M&A) have witnessed notable trends in India and globally. Firstly, there has been a rise in cross-border M&A activity, driven by companies seeking access to new markets, technology, and talent. Additionally, there has been a surge in digital and technology-driven M&A, as businesses aim to stay competitive in the digital era. Another trend is the increasing focus on strategic acquisitions to enhance capabilities, expand product portfolios, or gain a competitive edge. Moreover, sustainability-focused M&A has gained prominence, with companies aiming to align their operations with environmental, social, and governance (ESG) criteria. Lastly, the pandemic has accelerated distressed M&A, as companies look for restructuring opportunities or distressed asset acquisitions. These trends reflect the evolving landscape of M&A, characterized by globalization, technological advancements, strategic alignment, sustainability, and adaptability to changing market conditions.
5- How does the valuation process differ in M&A transactions in India compared to the global market?
Answer: The valuation process in M&A transactions can differ in India compared to the global market due to various factors. In India, there is a greater emphasis on the discounted cash flow (DCF) method for valuation, which focuses on future cash flows and growth potential. Additionally, the Indian market often considers the net asset value (NAV) approach, which values companies based on their net tangible assets. On the other hand, the global market tends to adopt a more diverse range of valuation methods, including comparable company analysis and precedent transactions. Moreover, cultural differences, regulatory frameworks, and market dynamics can also influence the valuation process, leading to variations between India and the global market in terms of valuation techniques and approaches used in M&A transactions.
| Iacuire Consulting LLP is a specialized global investment bank. Operating on an international scale, Iacuire serves as a financial services firm that facilitates significant and intricate financial transactions. This includes securing equity capital from Private Equity/Venture Capital firms and High Net Worth Individuals (HNIs), as well as facilitating mergers between corporations and similar entities. Mr. Manoj Aggarwal, Managing Partner and Mr. Aniket Aggarwal, Partner spoke about some of the questions related to industry. |
6- What are the key challenges faced by investment bankers operating in the Indian market?
Answer: Investment bankers operating in the Indian market face several key challenges. Firstly, regulatory complexities and frequent policy changes can create uncertainties and increase compliance burden. Secondly, the presence of a large informal economy and lack of reliable financial data pose challenges in conducting due diligence and assessing risks accurately. Thirdly, market fragmentation and regional variations in business practices require investment bankers to have a deep understanding of local dynamics. Fourthly, intense competition from domestic and international players puts pressure on fees and profitability. Additionally, inadequate infrastructure, limited exit options, and challenges in raising capital for investment activities further add to the challenges faced by investment bankers in India. Finally, cultural nuances, language barriers, and relationship-building in a diverse market like India require investment bankers to have strong interpersonal skills and adaptability.
7- How has the COVID-19 pandemic impacted the investment banking and M&A landscape in India and globally?
Answer: The COVID-19 pandemic has had a significant impact on the investment banking and M&A landscape in India and globally. Firstly, deal activity initially slowed down due to market uncertainties and disruptions caused by the pandemic. However, as the situation stabilized, there has been a resurgence in M&A transactions, driven by companies seeking strategic partnerships, distress acquisitions, and opportunities arising from market dislocations. Secondly, virtual deal-making has become more prevalent, with remote due diligence and virtual meetings becoming the norm. Thirdly, sectors like healthcare, technology, and e-commerce witnessed increased M&A activity, reflecting the changing market dynamics influenced by the pandemic. Lastly, the pandemic has highlighted the importance of risk management and resilience in deal-making, leading to a greater focus on robust due diligence and contingency planning.
8- What are the emerging sectors or industries that are attracting significant investment in India and globally?
Answer: Some of the emerging sectors or industries attracting significant investment in India and globally include technology and digital innovation, renewable energy and sustainability, e-commerce and online retail, healthcare and pharmaceuticals, and fintech. These sectors are experiencing rapid growth and are considered promising investment opportunities due to their potential for disruption and long-term viability.
9- How are environmental, social, and governance (ESG) factors influencing investment banking and M&A decisions in India and globally?
Answer: Environmental, social, and governance (ESG) factors are increasingly shaping investment banking and M&A decisions in India and globally. Investors are recognizing the value of sustainable practices and responsible business behavior. Companies with strong ESG performance are viewed as attractive investments, while poor ESG practices can lead to increased risks and scrutiny. ESG considerations are integrated into due diligence processes, impacting investment decisions, risk assessment, and pricing. The inclusion of ESG factors promotes long-term value creation, resilience, and ethical business practices in the investment banking and M&A landscape.
10- What role does due diligence play in investment banking and M&A transactions?
Answer: Due diligence plays a critical role in investment banking and M&A transactions. It involves a comprehensive assessment and analysis of a target company’s financial, legal, operational, and commercial aspects. The purpose of due diligence is to identify potential risks, liabilities, and opportunities associated with the transaction. It helps in validating financial projections, assessing the target’s market position, evaluating legal and regulatory compliance, and uncovering any undisclosed information. Due diligence provides crucial insights that enable investors and acquirers to make informed decisions, negotiate terms, mitigate risks, and ensure the success and value creation of the transaction.
11- How is technology reshaping the investment banking and M&A landscape in India and globally?
Answer: Technology is reshaping the investment banking and M&A landscape in India and globally by introducing significant advancements and transformations. Automation and artificial intelligence (AI) are streamlining processes, enhancing efficiency, and reducing operational costs. Digital platforms and data analytics are providing insights for better decision-making and risk assessment. Virtual deal-making, remote due diligence, and online collaboration tools have become more prevalent, enabling global connectivity and accelerated transactions. Fintech innovations are revolutionizing financial services, from payment systems to crowd funding platforms. Overall, technology is driving digital transformation, improving client experiences, and revolutionizing the way investment banking and M&A transactions are conducted in India and around the world.