The Deal Makers

Conservative— that’s how​ Nomura India describes its approach to doing business. Yet, it has grown to be one of the top investment bankers in the country. Here’s how the firm did it.

- Deepti Chaudhary

WHEN YOUR RIVALS FORM A PACT, wittingly or otherwise, to undermine you, it is a compliment in disguise. In 2015, when Alkem Laboratories, India’s fifth-largest pharma company by revenue, decided to go public, a slew of investment banks made presentations before the management. The agenda was the same: It was less about bagging the contract to lead what was the second-largest public issue by value that year than convincing the pharma company why Nomura India should not be made lead banker for the issue.

Investment banking in India is a closely contested industry. In 2018, the country saw mergers and acquisitions (M&A) and strategic deals worth more than $71 billion, breaking all previous records. However, nearly 25 companies floated initial public offerings (IPOs), raising about $5 billion—50% less than the value of IPOs in 2017. The field comprises players ranging from large American firms such as Morgan Stanley, Citigroup, and Bank of America Merrill Lynch to European firms such as Credit Suisse and homegrown ones such as Kotak Mahindra Capital, Axis Bank, and Edelweiss Financial Services. Even by these standards, making presentations to a management team to dissuade it from picking a certain firm is rare.

Alkem, however, decided to go ahead with Nomura India. The much-awaited public issue had a price band between 1,020 and 1,050 a share. And Alkem debuted on the stock exchanges at a premium of over 30% over the issue price at a time when eight of the 20 IPOs that year saw their share price slipping below their issue price.