The number of SEBI-registered merchant bankers has climbed to 244, the highest level since fiscal year 2000. This growth follows a record-breaking FY26, where companies raised over ₹1.8 trillion through IPOs. While this expansion reflects strong primary market demand, regulators are tightening financial requirements to safeguard investors.
The landscape for Indian merchant banking is expanding rapidly as the number of entities registered with the Securities and Exchange Board of India (SEBI) reached 244, marking a 24-year peak. This uptick in registrations tracks the surge in activity within the primary market, where companies are increasingly choosing to go public to raise capital. During FY26, mainboard IPOs alone raised ₹1.8 trillion across 112 offerings, while the Small and Medium Enterprise (SME) segment saw 254 companies raise nearly ₹11,000 crore.
Increased Market Interest and Fee Growth
The rising interest in public listings is driven by a wealth-creation effect, as family-owned businesses observe the valuation outcomes of their peers who have already accessed the capital markets. This trend has moved beyond major financial hubs, with new merchant banking registrations emerging from cities such as Ahmedabad, Jaipur, and Bhubaneswar. This growth is also reflected in the sector's earnings. The annual aggregate lead manager fees have risen significantly, jumping from an average of ₹400 crore in the five years preceding the pandemic to over ₹4,300 crore in FY26.
Regulatory Safeguards and Historical Context
While the current environment is robust, it draws parallels to the mid-1990s IPO boom, which saw over 1,300 IPOs in FY96. That period was later challenged by the issue of companies disappearing after raising funds. To mitigate such risks, SEBI has implemented a phased increase in the minimum net worth requirement for Category I Merchant Bankers. These entities must increase their net worth to ₹25 crore by March 2027, with a further hike to ₹50 crore by March 2028. This move aims to ensure that only financially stable entities manage public offerings, providing a layer of protection for investors.
Investors tracking this trend may look toward the pace of IPO pipeline filings and the impact of the upcoming net worth requirements on smaller, new-entrant merchant bankers. The sustainability of this sector's growth will likely depend on continued primary market demand and the successful execution of upcoming public issues.