Mumbai: A growing number of public offers and disinvestment mandates by the government is driving demand for investment bankers with expertise in the equity capital market (ECM).
In the past week alone, at least four global investment banks and one domestic i-bank have appointed chief executives to head their ECM business as they expect the Indian capital markets to perform better than many others.
Japan’s Nomura Holdings Inc., Australia’s Macquarie Group Ltd and UK’s Standard Chartered Plc have appointed ECM heads for India as domestic firms look to raise funds through initial public offerings (IPOs), follow-on public offers (FPOs) and rights issues.
“We expect a 20% rise in the number of i-bank hires this year,” said E. Balaji, president for staffing, selection and training at executive search firm Ma Foi Management Consultants Ltd, a unit of of Dutch human resources firm Randstad Holding NV.
On Monday, for example, Macquarie Capital hired Sanjay Agarwal to head its ECM division from Edelweiss Capital Ltd, while Nomura drew away Indraneil Borkakoty, former ECM head of Kotak Mahindra Capital Co. Ltd.
Standard Chartered has appointed a head for its ECM business, said Prahlad Shantigram, global head (mergers and acquisitions), at the bank, but declined to name the banker’s identity. Barclays Capital is also said to be scouting for one.
Standard Chartered, which acquired UTI Securities in 2008, has hired Ratnesh Kumar from Anand Rathi Securities to head its equities division.
Mumbai-based Ambit Holdings Pvt. Ltd is also close to finalizing an ECM head. “We are interested in setting up the distribution as we are looking at the larger ECM pool,” chief executive Ashok Wadhwa said.
Religare Capital Markets Ltd, the investment banking and institutional securities arm of financial services group Religare Enterprises Ltd, has appointed Nalin Nayyar to head its i-banking division. Nayyar was formerly head of i-banking at Citigroup Global Markets.
“It’s a case of more i-banks and less talent,” said Vinay Menon, executive director of equity capital and derivatives markets at investment bank JPMorgan India Pvt. Ltd.
Not surprisingly, bankers who can originate and seal the transactions, known in industry parlance as “rainmakers”, are highly prized.
“Talent that can front-end transactions is still at a short supply and so experience is not the sole criteria for hiring, but conceptual abilities, valuation, (and) due-diligence,” said R. Suresh, managing director at executive search firm Stanton Chase International in Mumbai.
The rush for talent is also explained by the numbers. As of 29 August, data from capital market regulator Securities and Exchange Board of India showed at least 37 companies have filed documents for an IPO, FPO or a rights issue.
Another reason for banks to grow their talent pool is the government disinvestment programme. NMDC Ltd, SJVN Ltd and NTPC Ltd have already raised capital through share issues, while floats of Coal India Ltd and Steel Authority of India Ltd are in the pipeline.
I-bankers expect $5 billion (Rs23,400 crore) to $7 billion of capital to be raised over the rest of the current fiscal.
“For the next three to four years, the amount of capital raised will cross the previous year’s mark,” said S. Subramanian, head of investment banking at Enam Financial Consultants Pvt. Ltd.
Statistics from Prime Database, a Delhi-based firm that tracks the primary market, show that issuance of shares in the first eight months of the calendar year have raised $13 billion, beating the $11.8 billion in all of calendar 2009.
“Firms with a balance sheet capability have moved away from pure advisory and the focus is on equity,” said Shantigram of Standard Chartered.
Not surprisingly, salaries of i-bankers at these levels have also jumped. “The variable component of the present salary is highly attractive and the fixed pay is also increasing,” said Suresh of Stanton Chase. A new job can mean an increase of 20-40% in salary, while junior bankers with about three years’ experience can get between Rs12lakh and Rs18 lakh more a year, he said.