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Corporate Report

Published on: Sept. 10, 2020, 10:05 a.m.
This nimble-footed investment bank is cautiously ramping up
  • Garg with Deshmukh: adding new areas of growth

By Lancelot Joseph. Executive Editor, Business India

Equirus Capital is a 13-year-old bouquet financial services company, that includes private equity, mergers and acquisitions, capital market (equity and debt), institutional broking, equity research, portfolio management services, wealth management and insurance broking. 

Since 2007, it has come a long way. The numbers speak. Starting as an investment bank (IB), over the years, it has concluded more than 155 deals across sectors. While IB started gaining traction, an institution equities (IE) desk was set up in 2010. In a matter of just a decade, IE has been able to establish a niche position with coverage of more than 200 companies and a 2 per cent brokerage market share in a highly competitive space. 

As both these sell-side businesses stabilised, Equirus entered the asset management space by launching a portfolio management service (PMS) in 2016. Backed by a differentiated strategy the assets under management (AUM) have scaled to more than Rs100 crore. In 2018, the company began a wealth management (WM) business and currently has more than 25 relationship managers advising clients worth around Rs2,500 crore, with tieups with Federal Bank and DCB Bank. 

Equity capital markets (ECM) practice in any investment bank is probably the last piece of the jigsaw in creating a full-service investment bank, since it involves the coming together of the investment banking team (including coverage, execution, regulatory and compliance) and the broking team (research and sales). 

“Our logo ‘the banyan tree’ showcases the ethos of our growth strategy. While existing businesses are growing, we add new areas of growth. As a result of this strategy, Equirus is now seen as a multidimensional financial services company and has a proven track record of entering a new business, establishing its position, and then going on to repeat the process,” explains Ajay Garg, the 49-year-old founder and MD of the company.

Backed by a team

Garg’s management team consist of people with experience doing private equity (PE) deals in various bulge market firms. “They were working with mid-cap companies and turning them into large cap. This has been an interesting theme and all of them were excited to be working in that space. As the large investment banks concentrated on the big transactions/companies there was a gap in the market segment that needed to be filled,” suggests Garg whose vision was backed by the ace investor Rakesh Jhunjhunwala, who invested the seed capital to launch Equirus Capital, along with other angel investors and management, helping create an investment bank catering to and specifically focussing on the high growth segment of the market. 

Over the years, Equirus has carved out a niche for itself by offering a wide range of products to meet the needs of growing entrepreneurial organisations and has developed a long-term relationship with these clients providing them advisory solutions while they charted their growth stories.

In 2018, Federal Bank entrusted Equirus as a partner by taking 20 per cent stake to offer Equirus’ financial solutions, beyond its traditional banking products, to its clients. “After evaluating a host of potential candidates, we invested in Equirus as we found them well positioned to become the most respected full-service investment bank aligned to Federal Bank’s vision.  Over the last couple of years, we have seen them grow and we are jointly working to offer a more comprehensive range of product offerings to our customers,” observes Shyam Srinivasan, MD & CEO, Federal Bank Ltd.

  • D’Souza expects to see consolidation soon

    D’Souza expects to see consolidation soon

Wider spectrum

As it happens, the Indian financial services sector is highly attractive from an investment perspective and has attracted significant capital in recent years. Sectoral investment activity has topped the charts across products segments such as PE, M&A or ECM (IPO, QIPs, rights issue, etc) by being amongst the largest sector in terms of capital raise in the recent past. “The current Covid-19 pandemic has impacted the trend and we expect to see consolidation and fund-raising activities to pick up in the near future,” says Donald D’Souza, the 50-year-old MD and co-head, investment banking.

“Equirus works across all segments in financial services such as banks, NBFCs, wealth management and with FinTech firms. The team can deliver deals across product classes based on customer requirements and has built relationships with clients to execute their financial and strategic initiatives. Equirus’ product-neutral approach enables us to work in the best interests of its clients.”

Equirus has been involved in a wide spectrum of transactions in the private equity (PE), debt syndication, debt capital markets and equity capital segments. On the PE side, Equirus has worked with the likes of DCB Bank, Sharekhan, Kogta Financial and U GRO Capital. On the debt side, the company has syndicated loans for some of the largest NBFCs such as AU Financiers (now SFB), Suryoday Microfinance (now SFB), MAS financial, Electronica, Capital Float and Manappuram. They have also executed QIP transactions for the likes of Syndicate Bank and Niyogin Fintech Limited, to name a few.

One of the more notable and complex transactions was that of U GRO Capital, wherein Equirus’ team helped promoters in identifying and acquiring a listed NBFC through the open offer route, raised capital via preferential placement and advised on the demerger of an existing NBFC business. Apart from the BFSI, Equirus has seen significant transactions in the IT segment along with infrastructure, specifically roads, and consumer and healthcare. “The sectoral focus in advisory which we have been following and combination of the public market and private side is giving us the necessary depth to engage with our clients and work with them as financial advisory partners,” says Ajit Deshmukh, MD & co-head, Investment Banking.

“Given the stage of the market in India, we believe that high growth companies lack access to quality advice and attention, so a firm like Equirus with advisory at its core DNA, differentiates itself extremely well from most larger houses who cater to bigger cap companies,” says Garg, aiming to become a full-service investment bank catering to all the financial needs of high growth clients in India – both in the listed and unlisted space.

“Our client base of corporates, institutional investors, sponsors and HNIs are catered to very comprehensively across our key businesses of investment banking (advisory and capital markets), institutional broking and research, wealth and asset management, and insurance broking,” adds D’Souza. 

“Our growth outlook is based on the relevant diversification of revenue, institutionalising the business, and keeping the nimbleness of the firm intact,” discloses Garg, talking about revenue diversification. He feels that going forward, “Equirus, with the annuity nature of the wealth and asset management business along with the insurance broking and institutional equities business, will iron out the cyclicality inherent in the capital markets and advisory businesses and help us build a more sustainable and diverse revenue model”.

  • Mehta: focus on asset management

    Mehta: focus on asset management

On institutionalising the business, Garg says: “Two years ago, we received backing from Federal Bank in the form of a 20 per cent stake in Equirus and board representation. We are building the organisation from the ground-up by incorporating various MIS and processes to be able to better handle capacity”.


While Equirus is attempting to always be nimble, its core market of high growth space requires it to be responsive and attentive. “Yes, while we have grown our businesses, we have attempted to empower decision-making at the business level with appropriate checks and balances. The impact of Covid-19 on the group has been mainly on the investment banking business. Given the stock market gyrations and minimum six months lead time to a transaction in the advisory and capital market businesses, the pipeline has to be rejigged, given the changed environment,” says D’Souza.

“Equirus Capital is a valued partner; what started as a research relationship grew stronger as we worked with them on corporate finance advisory, capital market transaction and M&A to get the full benefit of their service capacity. The Equirus team was one of the earlier backers of the Minda story and working with them, we have been able to get high quality investors and win the faith of the broader equity markets”, says Nirmal Kumar Minda, CMD of Minda Industries Ltd.

“Equirus Capital has provided merchant banking and financial services to us. They were one of the merchant bankers for our successful IPO in 2017. Equirus was instrumental in helping achieving our IPO and broader market acceptability with the excellent teamwork done by their research and sales team in close co-ordination with their investment banking and capital market teams,” observes Sukumar Srinivas, MD of Shankara Building Products Ltd.

Investors are now selectively opening up to evaluate deals in the sector but unlike the trend in the recent past where lending platforms have been at the forefront of raising capital, investors have now started looking at differentiated plays in the sector. While only existing investors are investing in lending platforms to keep the balance sheet adequately capitalised for any asset quality shock and managing ALM mismatch, fee income-based models such as AMC, wealth, distribution and broking should continue to attract significant investor interest in the near future.

“In the post Covid era, the importance of digital is cutting across businesses and we see a fundamental change being accelerated rapidly where, in place of technology automating old processes, it is now digital defining new business processes. This will lead to the creation of new enterprises and the acquisition of such capabilities by large companies,” says Ajit Deshmukh, MD and co-head, investment banking at Equirus.

According to Bhavesh Shah, MD, investment banking at Equirus: “The pandemic has led to the consumer and healthcare sector receiving a new focus and will fast track, not only most of the underlying prevailing trends like the digital push and new ways of doing business, but it will also fast-track the stakeholder’s view on the business – to either being acquisitive or being acquired. We believe therefore that the M&A activity in the sector will rise considerably.”

  • None

M&A deal flow

Talking about the M&A deal flow, Shah adds enumerating reasons for the flow to M&A in India. “Too much of a change required to restore the business back to its growth trajectory; succession issues; or simply coming together to create synergies by exploiting mutual strengths in a constantly evolving and a disruptive market. The pandemic will also materially change the view on the capital structure of the companies – equitisation would be a theme that most companies would adopt, be it focussing on cash flow generation or raising equity from investors.”

On the wealth management side, the Indian wealth management industry has come a long way over the last couple of decades. With every passing day, technology is becoming an integral part of this. “Whether it is usage of data science to evaluate client behaviour or digitalisation of execution and portfolio reporting, the intertwining of technology will only become more and more enhanced. At Equirus, we have clearly focussed on taking the hybrid route – RM led engagement suitably complemented with technology. Also, in terms of the customer segment, we aim to cover the emerging affluent category, which we believe is currently underserved and not given the right advice at all times. The current pandemic has fast-forwarded the digitalisation of the business by a few years and using technology as a suitable medium of engagement has grown by leaps and bounds,” says Ankur Maheshwari, CEO of the wealth management business at Equirus. 

“Equirus expects to grow steadily in the ECM business by plugging personnel gaps (coverage and execution) at appropriate times, expanding research coverage, and better overall coordination between investment banking and institutional equities. The ECM business takes a while to establish, and Equirus is in it for the long haul,” says Venkatraghavan S, MD and head of ECM business. 

Yes, the asset management business in India is expected to go through multiple changes in the next three-four years. “First is the huge rise in assets and shift in investor base. The rise in the volume of investable assets is set to grow faster than in the developed world. Growth in assets will be driven by key trends: the government-incentivised shift to individual retirement plans and the increase of high-net-worth individuals HNIs,” points out Viraj Mehta, MD and fund manager of PMS at Equirus.

Mehta feels that various pressures will affect the asset management industry; for example, fees will be under continued pressure amid the ongoing push for greater transparency and comparability. Investment in technology and data management will need to be maintained or increased to maximise distribution opportunities and to cope with regulation and reporting. “Asset management will be the focus. Indians have less than 5 per cent wealth in equities. This is set to dramatically change over the next decade. And, a new breed of winners will emerge.”

The dynamic business environment and fast emerging new concepts and complex situations have led people to look for quick and holistic solutions under one umbrella, and the missing piece of fixed income markets expertise was integrated into Equirus, making it a full house through adding another product to the host of offerings in providing innovative solutions to the trusted clientele build over the decade. 

In pre-Covid-19 times, the fragile NBFC markets were dented due to the ILFS & DHFL crisis, while large investors like mutual funds and insurance companies have been risk averse and selective in the credit pick. The pandemic added to their woes about the rating impacts which may unfold in later quarters, impacting the quality of portfolios. 


  • While existing businesses are growing, we add new areas of growth. As a result of this strategy, Equirus is now seen as a multidimensional financial services company

 “While the Covid-19 lockdown impacted the budget numbers, the huge borrowing programme by the Central government to provide stimulus to sagging businesses supported the central banks thorough conventional and non-conventional methods, security switches, OMO, intervention in forex market to curb volatility and TLTROs in providing financial stability across the  markets; while lowering demand led to near zero rates in developed nations, the Reserve Bank of India moved ahead of the curve in cutting rates. While the transmission in lending rates is always slower, the current pandemic has seen a paradigm shift in new corporates moving from traditional banking to bond markets,” observes Vinay Pai, head, fixed income at Equirus.

“As we go ahead with the opening of lockdown, we could see subdued activity for a couple of quarters post lockdown before we return to near normalcy in the second half of FY22. Erosion of capital with a rise in bad assets will see a need for large capitalisation of banks and NBFC sectors. We could also see a lower inflation regime for a longer period, sending bonds yields further south from here, supported with a couple of more rate cuts. While RBI will have a bigger task for the second half of this financial year and the coming fiscal, the opening of a few more sectors and easing the investment requirements by the government would invite large capital inflows,” feels Pai.

Go-to market

Equirus Securities has been one of the first institutional broking houses to be based out of Ahmedabad and only the second with a large presence outside Mumbai. Within a few years, Equirus became the ‘go-to’ broking house for institutional investors to get their research/opinion on Gujarat-based corporates. “We currently have active research coverage on more than 200 companies, and our strength has been in the midcap space, where we have a rigorous approach on ground level checks, expert road shows, annual report analysis, etc, making our research approach stand out from many of our peers,” says Satish Kumar, head of equities at Equirus, who, to enhance the company’s reach in institutional investors, started an institutional derivative desk in 2016.

He says: “Within a short time, we have been able to achieve a strong momentum. Our focus continues to be on a research-driven approach which facilitates better decision making for institutional investors and increases our market share in institutional broking.”

“In the initial period of Covid-19 in March 2020, increased volatility led to higher churning by institutional investors and that helped bring about a higher turnover. In the last few months, the global market has been flush with liquidity and this has led to a sharp recovery in most of the asset classes, including the stock market. Recently, retail investors’ participation has increased in the stock market and also in many small-midcap stocks. We continue to see strong domestic and FII flows and this will maintain momentum for our business,” concludes Garg, aspiring to consolidate and carrying on discussions to bag large cap companies, besides bringing in financial partners. 

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