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Booming M&A, rising salaries are siren call for bankers to return home

Booming M&A, rising salaries are siren call for bankers to return home
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First Published: Sat, Feb 17 2007. 02 08 AM IST
Updated: Sat, Feb 17 2007. 02 08 AM IST
Mumbai:When this reporter, relatively new to India, starts getting casual job offers to work in mergers and acquisitions, the industry clearly has a shortage of people to hire.
“The size of the opportunity is disproportionate to the people we have in hand because we see unprecedented growth,” says Ramesh Srinivasan, chief operating officer at Kotak Mahindra Capital Co., said about the industry.
As a result, investment banks and consultancies are struggling to meet the demands from India’s burgeoning market for M&A. Poaching local employees and driving up salaries is a standard practice when foreign companies enter or domestic practices mushroom. But, increasingly, some companies are also looking abroad to lure Indians experienced in deal making back home. The good news: these days, it doesn’t take much arm-twisting.
Srinivasan, who spends 30% of his time recruiting, said the number of resumes he gets from Indians abroad has skyrocketed. He said it’s “mind boggling” how many want to return and not just for a top position. “They are looking for substantial work,” he said. “They want to enjoy the independence of a new business that would be difficult to do in a large firm abroad.”
Another piece of good news: Foreign banks and consulting firms actually have a lot of Indians in this line of work. In many cases, these were people who went overseas specifically to work in this area. Now, with India’s deal activity spiking in the last 18 months as well as growing salaries and attractive albeit rising cost of living, Indians abroad have every reason to return to the acquisition-hungry subcontinent.
While none of the firms would talk salaries being shelled out to attract talent, annual base salaries, even though they vary greatly by firm size, appear to be around Rs6 lakh to Rs10 lakh for analysts, about Rs12 lakh to Rs20 lakh for associates and between Rs45 lakh and Rs65 lakh per annum for vice-presidents. More senior executives are getting upward of Rs60 lakh plus profit sharing. Of course, on top of these salaries there are bonuses for those in investment banks.
Rohit Kapur, executive director and advisory head of corporate finance at KPMG India, took this position in October 2006 after 17 years in the US, including 15 in New York.
“It is the excitement that is bringing people back,” said Kapur, who worked in a variety of finance-related institutions including Paine Webber, which is now part of the global investment bank UBS AG, and Cascadia Capital LLC, a bank focused on emerging growth companies. “It is the difference between working in a mature economy and one where there is so much opportunity.”
These advisors have the ability to both foster relationships and navigate the system in India, which is critical to getting clients in this business, and expertise in how the foreign process moves.
Srinivasan agreed that when a client hires advisors for a deal, the relationship or what he calls the “emotional quotient” is at least 50% of the equation, and often outweighs experience and skill. So while he would not hire an Indian from abroad over a foreigner because of nationality, he said the benefits of having Indians on the team are evident.
Because of these benefits, and the availability and interest of this talent pool, Kapur said about 15% of his 35-person team fit this description.
“You are the perfect intermediary,” he said. “Both sides of the table can relate to you. Indians look at you as an Indian who knows how the West works. The West looks at you as someone who knows how to operate with an insight into India. You are the bridge.”
Gautam Umesh Vora, managing partner at ULJK Group, a derivatives, securities and commodities broking house, returned from the US to start the 104-year-old company’s investment banking arm. Two months ago, Vora got the license, built a team and plans to expand.
The competition for talent will remain heated in the near term as companies of all sizes and market share expand. ABN AMRO will increase corporate finance manpower by 50% in the next year. Kotak Capital will add as much as 25% at the entry level. Ashok Wadhwa, partner and CEO of Ambit RSM Pvt. Ltd, sold his tax practice and plans to focus on corporate finance. Goldman Sachs plans to boost its presence in the next couple of months, and several insiders said that many of the newcomers will be Indian returnees.
Company heads say there will be no one solution to ensuring they have the right people on board in India. In addition to increasingly looking abroad and utilizing rotation programmes, M&A houses are taking employees from domestic accounting practices and commercial banks.
And college graduates with relevant majors are being targeted for the lower ranks. They also keep their services scalable by pulling employees from equities markets or research who have the flexible skills into deals.
The scarcity of experienced M&A advisors in India has also had an effect abroad. Not only are Indians and foreigners coming to India, new opportunities and internationally competitive salaries have reduced the number of people going out of India.
An investment bank head said that in this sector, an Indian shortage is also an international shortage.
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First Published: Sat, Feb 17 2007. 02 08 AM IST
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