When US investment bank Morgan Stanley parted ways with JM Financial last February after a 10-year relationship, the Indian financial services major, in which founder Nimesh Kampani owns 67 per cent of the equity, got richer by a cool $425 million (Rs 1,970 crore). That treasure-chest, of course, came at a price: The 60-year-old Kampani, who began life on Dalal Street in the mid-70s, had to hand over his institutional broking business to the Wall Street bank. He also lost a couple of his core team members (although he did get two from Morgan).
The new impetus is backed by a re-branding exercise. JM roped in brand consultants Chlorophyll. The company now has a slogan that says, ‘Trust is always the answer’. The options that were short-listed were ‘wealth-creation for the nation,’ and ‘a team of experts.’ But a survey of employees revealed that trust was something that most of them identified with.
JM today has fresh capital, new businesses and a new look. The big question is whether all this is enough to help Kampani become a significant player in the new businesses he’s entered, and regain his pride of place at the top of the league tables in mergers & acquisitions (M&A) and equity capital markets (ECM, which includes public issues, right issues and qualified institutional placements). Over the past five years, JM (with Morgan in tow for most of that period) has been numero uno in both M&A and ECM (see Yesterday’s Hero). However, as per data from Thomson Financial, JM has since tumbled to #6 in M&A and #5 in ECM.
A big reason for that fall is that JM without a global partner isn’t able to play in the outbound M&A segment, which is clearly booming. Kampani agrees that “today we can’t provide financing for global deals. For raising money abroad they will go to a JP Morgan or a Citibank. But then no one can get 100 per cent of the deals. Our specialty is the domestic market and we will offer a whole range of services from giving solutions to the clients to M&A, private equity, funding for domestic M&A and launching innovative products.”
Yet, it isn’t as if Kampani is giving up on the crossborder segment. He’s sewed up a string of alliances with boutique advisory firms in the US, the UK, Russia and Asia to either represent their clients if they come to India, or to spot targets for JM in those regions. The firm has plans to set up offices in Singapore, West Asia, and the US, and has also applied for licence to set up a Mauritius entity that will help in bringing specialised and innovative products for clients through the overseas offices.
| From partner to rival|
A Wall Street bank as a partner isn’t quite the arm candy to be seen around with these days, what with the credit turmoil on Wall Street showing little sign of ebbing. Yet, when Morgan Stanley broke up with Nimesh Kampani’s JM Financial last year, it did leave Kampani on a weak wicket (although he did make a killing in the process), particularly on the cross-border front. Over the past year, even as Kampani has gone about putting together a crack team, his partner of yesterday has been attempting pretty much the same. Last October, after a 12-year stint of global consumer goods giants like Unilever and PepsiCo on M&As at Morgan Stanley, New York, Aisha de Sequeira flew into India to take over as Head, Investment Banking, Morgan Stanley India. In less than five months, she has built a 25-member investment banking team. Meantime, Narayan Ramachandran, who relocated in 2006 from Singapore to head Morgan Stanley’s mutual fund business, was appointed Country Head of Morgan Stanley India last October. Says Ramachandran: “A joint venture has its own restrictions. Now with the split completed we will complete our basket by introducing all products that are available in markets where Morgan Stanley is present.” Other than investment banking, Morgan Stanley launched its second equity fund, after 14 years. It also plans to foray into global wealth management and infrastructurefocussed private equity. “Our DNA is Indian compared to our global peers, as we have been here for a long time.”
Also in India for a long time is Merrill Lynch, in a JV with Hemendra Kothari’s DSP. The Wall Street Bank is running solo today (although the firm continues to be called DSP Merrill Lynch, and Kothari is still Chairman). Last fortnight, Kevan Watts, after spending 27 years in New York, London and Hong Kong with Merrill, was appointed the first President of DSP Merrill Lynch. With the US— and Merrill Lynch—reeling under the subprime chaos, it isn’t a bad time to be in India—and, as de Sequeira and Ramachandran will testify—Indian.