Jefferies Foresees Surge in Investment Banking Fees in India as Deal Activity Grows

In a recent interview with Reuters, Jefferies Financial Group’s Country Head for India, Aashish Agarwal, expressed optimism about the prospects of increasing investment banking fees in the country over the next couple of years. As the number of deals in India rises, the complexity of transactions has led to higher fees, marking a significant shift in the market landscape.

Global investment banks, grappling with a slowdown in dealmaking activities in China, are turning their attention to India. Despite historical challenges for Western banks in the Indian market, Jefferies has seen a surge in its market share in 2023, especially in equity capital markets (ECM) and mergers and acquisitions (M&A).

Agarwal noted that Indian markets have matured, attributing the rise in fees to the growing complexity and volume of deals. While deal sizes in India are generally smaller, newer Indian companies, particularly those backed by private equity firms, are increasingly willing to pay advisory fees. For substantial mergers, Agarwal highlighted that 2% to 2.5% of the deal value is now considered a “decent number,” a notable increase from a couple of years ago.

Jefferies, currently topping the ECM tables in India with nearly 11% market share, has expanded its investment banking team in the country. The bank has climbed to No.11 in India M&A, showcasing its strengthened position in the market. Agarwal suggested that India could become the most profitable market, by margins, for foreign banks, emphasizing the positive impact on Jefferies’ performance.

In addition to its success in India, Jefferies has recently opened offices in Israel and Brazil, reinforced its presence in Dubai, and established an investment banking and capital markets unit in Canada this month. These strategic moves underscore Jefferies’ commitment to global expansion and capitalizing on emerging market opportunities.