India Bond House: AK Capital

IFR Asia Awards 2023
3 min read
Asia
Krishna Merchant

Deepening the market

AK Capital stood out among Indian bond houses for its efforts to develop the market by bringing new issuers and putting a focus on ESG.

AK Capital ranked fourth for Indian rupee bonds with volume of Rs665.9bn (US$8bn) from 149 issues and market share of 9.7%, according to LSEG data.

Public bond issuance revived in 2023, as bond portals mushroomed and tax changes encouraged retail and institutional investors to buy bonds directly rather than through debt mutual funds.

AK Capital was one of the top arrangers of public bonds in the Indian market. It printed Rs54.8bn as sole arranger, a testament to its wide retail distribution capabilities.

It brought muni bonds to Indian retail investors for the first time, with a green angle that drew extra attention. It was one of the two lead managers for the Rs2.44bn debut public bond issue by Indore Municipal Corporation, which funded a solar project.

The issue received a stellar response with subscriptions totalling Rs7.2bn or 5.9x the base issue size of Rs1.22bn. The muni bonds were issued in separately transferable redeemable principal part format for tenors of three to nine years at 8.25%.

It was sole arranger for microfinance institution CreditAccess Grameen’s Rs9.89bn public bond, for Cholamandalam Investment and Finance’s debut public issue and two subsequent deals, and for three issues by Muthoot Finance during the year, as well as one of the arrangers for the maiden public bond issued by Aditya Birla Finance in September.

AK Capital was also a joint arranger for the maiden social bond issued by National Bank for Agriculture and Rural Development. The state-owned company raised Rs10.4bn from five-year bonds which were priced at 7.63%, around 4bp tighter than the secondary yields of its existing bonds.

It helped arrange the National Bank for Financing Infrastructure and Development’s Rs100bn 10-year debut bonds, which saw massive demand from insurance companies, pension funds and mutual funds. NaBFID, which finances long-term infrastructure projects, started lending in 2022.

AK Capital also helped small lenders like Fincare Small Finance Bank, ESAF Small Finance Bank and Fedbank Financial Services raise Tier 2 bonds, putting them in good standing before the Reserve Bank of India in November asked lenders to set aside more capital for unsecured consumer loans.

The bond arranger also helped several lower-rated finance companies such as Aye Finance, Vastu Finserve India and Clix Capital Services raise rupee bonds.

Beyond the financial sector, AK Capital brought infrastructure trusts such as India Grid Trust and Mindspace Business Parks REIT to the bond market. It was also the sole arranger for Highways Infrastructure Trust’s Rs2.75bn commercial paper issue.

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