When Nirmal Jain flagged off India Infoline in 1995 with the slogan, "It's All About Money, Honey," he wasn't kidding. It's still about money-loads of it. Last fortnight, India Infoline was the hot buzz on the Street when four senior executives from foreign brokerage CLSA quit to join the Indian share shop. It's not just the phenomenon of MNC employees joining an Indian firm that was surprising. The numbers involved too are eye-popping.
"Bharat Parajia, Head of Sales, CLSA Singapore; H. Nemkumar, Country Head, CLSA India; Vasudev Jagannath, Head of Sales, CLSA India; and Aniruddha Dange, Head of Research, CLSA India, will be joining India Infoline to ramp up the brokerage's institutional business," says Nirmal Jain, CMD, India Infoline. "I know all the four and it was not an effort to convince them." The four wouldn't have needed much convincing, what with each of them being offered Rs 11 crore as a signing bonus! That's not all. The company will issue a total of 90 lakh preferential equity warrants at Rs 440 each to the four. Of these, 25 lakh shares each will be allotted to Parajia (he already owns 2.88 per cent in the company) and Nemkumar. Jagannath and Dange will get 20 lakh shares each. This will dilute the company's equity by 15 per cent. For the year ended March 2006, India Infoline showed net profits of Rs 52 crore on sales of Rs 286.72 crore.
Says Jain: "It a win-win situation for all of us. We are trying to emerge as a full financial services house and the four new recruits will help us in building a team that will offer wealth management, investment banking and institutional broking services. For them it's a new lease of life, with an opportunity for each to build a business of his own." Currently the institutional pie accounts for just 1-2 per cent of India Infoline's total sales. In 2-3 years, Jain wants it to be as big as the retail business, which accounts for 60 per cent of the company's revenues.
Clearly, financial services-particularly the equity markets-is where the action is, and firms are willing to pay big bucks for the right people. Recently, JP Morgan poached executives from Citibank, DSP Merrill Lynch, Enam Financial and I-Sec. JP Morgan is expanding its equity business in India. Meantime, private equity players have been buying into Indian brokerages like Anand Rathi Securities, Geojit Financial Services and Fortune Financial Services. Interestingly, DSP Merrill Lynch has already acquired 12 per cent in India Infoline. Jain is quick to rubbish rumours of him being keen to cash out of India Infoline. "It's my baby and I will grow on my own." But then again, it may just be all about money, honey.