Investment bankers are expected to receive substantial bonuses this year, despite a somewhat lackluster quarter. On average, these bonuses could amount to 125-150 per cent of their annual salary, with some individuals potentially receiving up to 200 per cent depending on their performance and the bank they work for.
According to a banker, bonuses are likely to exceed 125 per cent at most firms, as almost all financial products have performed well throughout the fiscal year. These bonuses are directly tied to the fees collected, which in turn are influenced by the level of deal activity and the amount of funds raised.
Equity fundraising has been particularly robust this fiscal year, with a total of ₹2.18 lakh crore raised, more than double the amount raised in the previous fiscal year. The fees collected from activities such as initial public offerings (IPOs), qualified institutional placements (QIPs), and block deals are estimated to exceed ₹3,400 crore for equity capital market (ECM) bankers.
New age technology companies, like Swiggy, entering the market have contributed to the increase in the fee pool. Banks typically earn 2-3 per cent in fees for managing IPOs, 1.5-2 per cent for handling QIPs, and up to 1.5 per cent on block deals.
Despite a slowdown in IPO activity this year, the pipeline remains strong, with 43 filings in the past two months. Additionally, 47 companies have regulatory approval for an IPO, and another 68 are awaiting approval, which could potentially raise ₹1.82 lakh crore.
Market conditions will play a crucial role in the pace of IPO activity going forward. If fund flows stabilize and interest rates soften, IPO activity could pick up. The banker mentioned that a positive results season in March could lead to increased activity from April onwards.
In conclusion, despite a subdued quarter, investment bankers are poised to receive substantial bonuses this year, driven by a strong fee pool from various activities in the financial markets. The IPO pipeline remains robust, indicating potential growth in deal activity if market conditions improve.
