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On August 9, Ola Electric Mobility became the first purely electric vehicle company in India to list its shares on the stock exchange after floating an initial public offering (IPO). Spearheading the process behind the scenes were two Indian corporate law firms, Cyril Amarchand Mangaldas (CAM) and Shardul Amarchand Mangaldas (SAM) — who advised Ola Electric and the bankers, respectively. “Right now, the market is booming. It’s on an upward trend,” says Sayantan Dutta, a partner from the capital markets team at SAM. The number of companies launching IPOs has surged in the last couple of years. According to the Economic Survey 2023-24 released by the Ministry of Finance, “The number of initial public offers (IPOs) increased by 66 per cent in FY24 from 164 in FY23 to 272 in FY24, while the amount raised grew by 24 per cent (from Rs 54,773 crore in FY23 to Rs 67,995 crore in FY24)”. The level of due diligence required to get approval for a public listing from the Securities and Exchange Board of India (Sebi) is quite high. This is where capital markets teams come in — to draft offer documents to be submitted to the Sebi and any other transaction agreements that may be required. “It’s important for you to be able to tell the public what your company is about and what are the risks involved in investing in your company. What is your business model? Who are your directors? What sort of cases do you have against you? What is your liability?,” says Debanjan Mandal, managing partner at Fox & Mandal. These are some of the questions that companies have to address in their draft red herring prospectus (DRHP) that is sent to Sebi before it allows the company to list its shares. “Which brings me to the key point of all this…capital markets, unlike other practices, is a very labour intensive practice,” Mandal states. To meet the demands of the booming IPO market, law firms have been expanding their capital markets practices. In July, rebounding from the loss of key partners from the capital markets team, CAM hired former IndusLaw Capital Markets partner Manan Lahoty, along with his team of nearly 50 lawyers (including 8 partners). Though this was perhaps the most notable exodus in recent times, CAM is far from being the only firm strengthening its capital markets practice. Large firms like SAM and Trilegal have also made key hires in 2024 at the partner level and mid-sized firms, such as Fox & Mandal and Crawford Bayley, have been building or expanding their capital markets practices. According to Dutta, part of the reason that the market has been so robust is the decreased reliance on foreign investors due to the rise of Indian mutual funds. Dutta details how this directly affects the market for Indian lawyers, stating, “the moment you draft the full book (the necessary agreements for listing shares), you can charge a much higher fee compared to if you have to share the drafting with an international legal counsel … At the same time, it’s also straining the bandwidth.” This strain on the bandwidth also has a role to play in firms’ active hiring practices. “So three people on a transaction could do the deal last time, but now you need four to five people on the transaction,” Dutta adds. Further, it is not just established companies like Ola that are getting on the IPO boom. Apart from larger ‘Main Board’ listings, there is the small and medium enterprises board (SME). Smaller companies which don’t see the the benefit of going for a oversight heavy Main Board listing — where the IPO process could go on for six months to a year — will list its shares on the SME board. This opens the door for mid-sized firms to get in on the action, says Mandal. However, the optimism about the IPO boom comes with a note of caution from lawyers — the market is cyclical, and what goes up must come down. “Every law firm is trying to scale up right now. But at the same time, they have to scale up in a very, very methodical way because we all know capital market is a cyclical practice. So markets are up today and overnight you make 200 lawyers team, markets will go down tomorrow or day after tomorrow, and then you will be left to fire half of the team,” says Dutta. Or, as Sanjay Asher, senior partner at Crawford Bayley & Co (a mid-sized firm) states, “Once the market goes down it will be as dry as a desert.” Some firms indicate that they have evolved practices to deal with the ebb and flow of the market. Abhinav Maker, partner at Trilegal, says “Larger firms understand the practice needs to be incubated. There will be times where it (capital markets) is the highest earning practice and times where the market is down”. Lawyers from these teams often take up tasks in other areas of corporate law which see an increase in business when the market is lean. Some mid-sized firms also indicate they have plans in place for these situations. “We don’t fire lawyers … we deploy them in mergers & acquisitions teams to do due diligence,” adds Asher. 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