ICICI Securities Ltd (I-Sec), the investment banking subsidiary of ICICI Bank, has ceded a major role to the parent. I-Sec will not do M&A advisory work on such deals which involve a change in the control of the company. From now on, such mandates will be done by the internal investment banking division of ICICI Bank.
The Economic Times reported, quoting Madhabi Puri-Buch, MD & CEO of I-sec, that her firm will not do such M&A mandates where control changes hands. “Since a predominant number of people, who wish to be advised on M&A, also look for acquisition finance, it was decided that the business should be housed in the bank,” Puri-Buch told ET. “Now, if a corporate is seeking a sell mandate or a buy mandate, where the transfer of controlling interest takes place, the deal will be done by ICICI Bank.”
This is an interesting development since it means ICICI Bank will be strengthening its role in M&A advisory business. And this will also help ICICI Bank compete with multinational biggies like Citigroup, Standard Chartered Bank, Royal Bank of Scotland, Nomura and BNP Paribas in funding large acquisition deals.
And acquisition financing is becoming a major determinant for bagging mandates for large M&A deals. Right now, MNC banks like BNP Paribas and Indian banks like State Bank of India are in race to fund Bharti Airtel's deal with MTN.
ABN Amro, which was an advisor in Tata-Corus acquisition deal, had provided acquisition financing to the Tatas.
Leaving large M&A advisory business for the bank means I-Sec will have to satisfy with smaller M&A deals, private equity advisory, IPO advisory and institutional and retail broking.
ICICI Bank's position in Mergermarket league tables shot up to No 3 in 2008 with 17 M&A deals worth $1.1 billion in its kitty compared to 22nd position the previous year with just 3 deals.