Marquee deals
In a year when investors fled to safety in India, Bank of America made its mark with a series of marquee transactions.
A federal election, a crisis in the financial sector and a worsening economic slowdown took the steam out of the Indian equity capital market in 2019, and only quality deals had a chance of winning over investors.
Bank of America put its global network to good use, selling difficult deals for issuers and ensuring that investors made money.
The bank topped the India equity and equity-linked league table in IFR’s review period, raising US$2.7bn from seven transactions.
BofA was joint global coordinator on the landmark Rs48bn (US$670m) IPO of Embassy Office Parks REIT in March, India’s first real estate investment trust and the result of five years of preparation.
The deal was challenging as the federal elections were around the corner and existing infrastructure investment trust (InvITs) had not traded well since their IPOs in 2017.
Extensive meetings with foreign institutions and two rounds of global roadshows were conducted to position the issue as a play on the Indian growth story with a stable dividend yield. The effort paid off, with foreign investors taking the majority of the IPO and BofA playing a key role in finding international demand for the anchor book.
During the review period, BofA also demonstrated its ability to secure sole mandates and repeat deals in the highly competitive Indian market.
The bank had the unique distinction of arranging four stake sales in HDFC Life Insurance by Standard Life Aberdeen. BofA helped raise Rs14bn in May and Rs34bn in March to increase liquidity on the local stock exchanges to meet the minimum 25% free float. It followed that up with overnight blocks totalling Rs32bn in August and Rs58bn in October as Standard Life decided to monetise its investment further following a rally in the stock price.
Given the volatility in the local market, a flexible structure with an upsize option was chosen for both the overnight block trades, and demand from high-quality long-only institutions led to both deals being increased. The August block was priced at Rs480.35 and the October one at Rs575, and the shares remained above the placement price as of mid-November.
BofA also helped Vodafone Idea complete a huge rights issue of Rs250bn despite the uncertain outlook for the beleaguered Indian telecom sector. An additional challenge in the transaction came from Malaysian telecom provider Axiata, which decided to sell its entitlements totalling US$291m (at the then prevailing exchange rate).
Two global roadshows were conducted, and the issue was marketed to over 100 investors. BofA was again instrumental in sourcing orders from overseas buyers and incremental demand from existing shareholders. In the end, Axiata’s rights entitlement was subscribed 3.2x.
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