Ajit Deshmukh of Equirus on the investment firm’s journey in FY22 and it plans to invest in cryptocurrency start-ups

Financial services Equirus Group which runs Equirus Capital, a mid- market, full service investment firm is looking to expand its services into blockchain start-ups besides cryptocurrency firms. The investment firm is in the process of raising funds for a blockchain company. In conversation with FE.com’s Ritarshi Banerjee, Ajit Deshmukh, managing director and co-head – investment banking, Equirus talks about how a differentiated strategy has helped in its growth. (Edited Excerpts)

As per various reports, Equirus had closed about five capital market transactions worth Rs 42 billion in 45 days. How do you plan to continue to grow in FY23?

In FY22, the company grew by 150%. A lot of the growth was based on factors such as increase in recruitments, initial public offerings (IPOs), transactions,among others. Investments increased across all segments right from an early stage to mature markets which included mergers and acquisitions. So, Equirus’s growth is probably in line with the industry standard, maybe, a little better. I believe that we act as mirrors of the financial markets. When we grow then the overall industry grows at a similar pace. This further enables investment bankers to grow and deliver transactions on time. The investment climate has been positive, and confidence has been high across the board and other sectors. It is the first time we have seen activities across sectors like infrastructure and technology and IT, with one being asset oriented and the other being IPN and service oriented. We’ve also seen action across sectors including chemicals and pharmaceuticals. The current challenge of our industry is the continuous hiring of people.

How has been Equirus’ strategy different from other investment firms, and what has worked in your favour?

If you look at our size and shape, we’re probably the only full-service investment firm which provides advisory services on mergers and acquisitions, private equity, desk syndication, among others. We also have a broking segment which provides services to institutions like Bombay Stock Exchange and National Stock Exchange, and we have enterprise content management.  We are probably one of the few firms which has a 360 degree view of the market. If you look at boutique firms, they stick to advisory which makes their view on the public market narrow, if you look at large bulge bracket firms, they only serve larger groups and clients, which makes us probably the only full service investment bank. We remain focused towards clients, data objectives, and have received good reviews.

How do you look at emerging sectors such as  blockchain, cryptocurrency and non-fungible tokens (NFT)? Any plans to enter this sector?

We, as merchant bankers, look into every attractive space and cryptocurrency is one such area. We are doing a couple of transactions in cryptocurrency right now, and we even have a mandate from a blockchain based company outside India for raising money. These sectors have been witnessing a lot of action. 

As the private equity sector clocked compound annual growth of US$ 47.6 billion in 2020, how has this helped with India’s current economic recovery?

As private equity brings in the required level of risk capital for people to start and grow businesses, it also generates employment. It definitely has a compounding effect of about four to five times for every dollar or rupee that gets invested, in terms of total employment. When we didn’t have equity instruments that much, somebody’s ability to start a business without capital was  limited. With capital now being available, the process of raising funds is easier and that has changed the landscape. So, there’s no debate of private equity as a concept. Equity investments for growing businesses have had compounding effects on the general economy.

In terms of volatility, how much of a challenge is the current Indian market?

From the perspective of merchant banks and brokers, volatility is a little good because that uses the churn of stable markets. In reality, I don’t think that markets are stable right now because the world is focused on other happening things. Yes, markets are uncertain. When I completed my first transaction in the stock market, the settlement used to take fifteen days and now, it’s faster. Everything has changed. I believe that the confusion between volatility and speed of operations needs to be cleared.

With technology being a wide subject, what kind of investments do you expect?

IT service will remain a mergers and acquisitions vertical in India. Indian IT companies will acquire a high base, and new technologies will see a lot of investment rather than acquisition. Sectors like healthcare and life sciences will see a lot of action, and the fintech industry will have a more money oriented situation.

How do you see FY 23 turning out for Equirus, and what will be the key areas of focus in India?

We would like to repeat our performance from last year but our business is unpredictable. I feel infrastructure will continue to have a lot of action along with technology, especially in the areas of blockchain, cryptocurrency, among others.