I-banks top guns churn as Wall Street swoops down

MUMBAI: Nimesh Kampani, chairman of JM Financial, struck a great deal when Morgan Stanley, JM’s partner of eight years, bought out the institutional broking arm of their joint venture for $445 million.

But Kampani may not have expected the exodus that took place from the investment banking arm of the joint venture, which he had retained.

In June, four months after the split, V K Bhansal, managing director of investment banking, left to join Morgan Stanley, at a time when JM itself is kicking off deal-making activities in India.

Others executive directors Kamal Yadav, Divesh Desai and Sachin Wagle (director, capital markets) followed Bhansal to Morgan.

Kampani, however, remains unfazed by the exodus. “We have 30 deals in the pipeline and we are not affected,” he said. But peers say Bhansal will be missed because he had all the government connections.

HR headache

As more and more global dealmakers beach, the pressure on the human resources talent of the old Deal St warhorses intensifies.

This is not affecting business by much, though, because the traction they have gained in the Indian market over the years still makes them trusted lieutenants of companies wanting to raise money.

DSP Merrill Lynch is a case in point. Industry sources said the venerable brokerage has lost at least 10-12 top investment bankers in the past six months.

But still it figures prominently in the list of dealmakers, having helped raise $10 billion across six deals in a matter of a month.

“Nobody likes losing people, but across industries we are witnessing growth, and with growth comes a larger demand for top management,” said Hemendra Kothari, chairman of DSP Merrill Lynch, said.

One prominent name Kothari lost is Sanjay Sharma, director and head of equity capital markets (ECM), who quit in February to join as the head of ECM at Deutsche Bank.

His replacement Sumit Puri, who had been brought in from Merrill Lynch’s Hong Kong office, has also put in his papers.

Another high-profile exit from DSP Merrill has been that of yet another ECM director — Vijay Khattar, who put in his papers in May to join Citigroup India. The world’s largest financial services company is ramping up operations India.

It’s everywhere

Citi’s ECM is headed by Ravi Kapoor, who had again joined from DSP Merrill in mid-2005. Kothari, like Kampani, is untouched by all this: “In fact, this year we have increased our staff strength by more than 50%.

Youngsters from within the cadre have also come up, and have started shouldering more responsibilities. And as a firm with global and local experience, we’re still a preferred partner,” Kothari said.

Of course, he also admits that the market has been good for dealmakers of late. The combined value of M&As involving Indian companies and funds raised by domestic corporates in the first half of 2007 has topped $70 billion, compared with $105 billion in the whole of last year.

Citigroup itself, which has been around for a while, has not been immune to poaching either.

Surojit Shome from Citi’s corporate banking division moved to Lehman Brothers India in October 2006 to head its investment banking operations.

“When the pool is limited, the older players in the industry become the target,” said an investment banker who did not wish to be named.

ICICI Securities has also been at the receiving end, with two of its stalwarts leaving recently. Mehul Sawla, who spent 8 years at ICICI Securities and headed its ECM division, has joined JP Morgan.

J Niranjan, who spent almost a lifetime at ICICI Securities (17 years to be precise), quit the organisation as head of investment banking and M&A advisory to join CLSA Asia Pacific Markets as its co-head of investment banking.

CLSA itself lost its cream in June to local brokerage India Infoline, which doled out the biggest sign-up cheques ever seen in India - Rs 44 crore for four bankers.

Salaries fly

The advent of CLSA, Lehman Brothers, Goldman Sachs, UBS … the Who’s Who of global banking has also meant salaries of top bankers reaching stratospheric proportions.

Industry sources said today, a hot investment banker draws as much as peers in other Asian financial hubs such as Singapore and Hong Kong - if not more.

Which means we are talking in the high double-digit crores.

One heavy-duty local investment bank that has not been affected much is Kotak. Its employee stock options have been a big hit, and is probably the reason why many have held on.

“It’s the work culture and Uday Kotak,” says Mehul Savla (no relation of the JP Morgan honcho), executive director and co-head of the equity product group at Kotak, who has been a loyalist for 13 years.

Enam Financial Consultants, the premier local brokerage that has been in the news following talk of Japanese giant Nomura picking up stake, has also been relatively insulated, as its core team consists mainly of the promoters.

Other recent movements in the I-banking industry include that of Abhay Pande, relationship banker for infrastructure and real estate for DSP Merrill, who has joined the Silicon Valley marquee Sequoia Capital in India.

Sunil Mehra, another DSP Merrill stalwart, also left recently for Standard Chartered Bank.

Elsewhere, Savita Shah and Jatin Sangvi of JP Morgan are said to have joined Lehman Brothers and Credit Suisse, respectively.

As this wave of bulge-bracket Wall Street biggies swoop down, and those already here expand operations, people movement is only going to intensify.

But the moot question is, is the business large enough for everyone? Also, will there be enough expertise in the market to chomp the pie?

Time will tell, as will this space.