New Delhi: Elara Capital Plc, a UK-based investment bank that specializes in offering services to mid-sized firms, has set up an Indian subsidiary in an effort to tap a booming market for cross-border acquisitions.
Elara Capital India Pvt Ltd will operate in the merchant banking, M&A, and institutional broking businesses.
Elara’s entry comes in the wake of efforts by large investment banks that didn’t have a significant presence in India to set up offices in the country. Lehman Brothers and Goldman Sachs are among these banks.
Meanwhile, several small firms, such as Avendus Advisors and Mape Advisory Group are positioning themselves as boutique investment banks that focus on deals in specific areas.
Elara Capital, which has already helped Indian firms raise $1billion (Rs4,100 crore) over the past three years through overseas issues including global depository receipts (GDRs) and foreign currency convertible bonds, hopes to become an advisor to Indian firms eyeing acquisitions in other countries.
“A number of Indian companies are looking for acquisitions in Europe to gain access to the market,” said Raj Bhatt, chief executive officer and the founder of Elara Capital Plc, adding that the easiest way to turn around these companies was to use India as an offshore destination for manufacturing or service-delivery.
“Given our strong presence in the UK, we have deep relationships with local investors and this will enable Indian businesses to do deals through us,” said Alok Kabra, the head of investment banking for the Indian office of Elara.
According to Grant Thornton LLP, a financial services company that also tracks M&A deals, 2006 witnessed 480 such deals involving Indian firms, valued at about $20.3 billion, average deal size last year was around $40 million.
Elara Capital Plc was founded by a few Indian finance professionals in 2002. Apart from being an investment bank, the firm is a registered broker for London Stock Exchange’s Alternative Investment Market, a trading platform for small and mid-sized companies. India is the only country outside the UK where Elara Capital has extensive operations.
In 2005, Elara got itself registered with the Indian capital market regulator as a foreign institutional investor (FII). It launched an off-shore India-dedicated fund—Elara Opportunities Fund—in 2006.
So far, the firm has helped around 30 Indian companies, including Era Constructions Ltd, Cranes Software International Ltd, Aptech Ltd, Gammon India Ltd, issue GDRs.
Elara is now helping take Indian Film Company, a firm promoted by Network 18 Fincap Ltd, to London’s AIM market.
It also claimed to be in the process of working out a leveraged buyout deal for two mid-sized Indian companies, but refused to disclose the details.