Bonus season over, job churn begins at i-banks
Abhineet Kumar / Mumbai March 12, 2010, 0:10 IST
Stuart Gulliver, head of HSBC’s global investment banking business, is planning to give away the £9 million bonus he received this year to charity. Many investment bankers in India, however, are charting moves of a different kind after receiving their bonuses — up to 100 per cent in most cases.
Most of them are moving to the exit door.
The churn in investment banks, though less muted than in the heydays of 2007, is gathering speed. “The pent-up desire to move is very high at the moment,” says R Suresh, managing director at head hunting firm Stanton Chase.
Every year, after bonuses are given in January and February, employees at investment banks “plan their career”, Suresh says. The desire to move is higher this year for another reason, he adds. “In many ways the era of big brands are now being questioned; people want to work with institutions that are better at managing risk.”
The most high-profile job switch is that of Kaku Nakhate, head of equities at J P Morgan, to Bank of America Merril Lynch (BOA ML). Nakhate is joining BOA ML as chief executive officer, replacing Kevan Watts who is retiring. She is bringing in a team of bankers from J P Morgan, said people familiar with the development.
There have been many others — all in the last one-and-a-half month. Gaurav Gupta has joined as head of investment banking at Macquarie, moving from Nomura. Nipun Goel joined Nomura as managing director, moving from BOA ML. Sumit Khanna and K Mahesh have joined Morgan Stanley as executive directors, moving from HSBC and Edelweiss, respectively.
Samita Shah joined the investment banking arm of Axis Bank from Credit Suisse some time ago, and Nitin Jain has moved out of ICICI Securities to join Nomura as co-head fixed income.
Head hunters claim more moves are expected to materialise in about a month. “Various developments are taking place and if people want to ride the growth wave then this is the time to do so,” said Suresh.
The other reason for the churn is the composition of bonuses. “There was not much of a cash component in bonuses announced at global investment banks, so employees are looking for better opportunities,” says Sourabh Chattopadhyay, executive director at Options Group, an international executive search firm dedicated to the financial sector.
Bank of America CEO Brian Moynihan confirmed that investment banker bonuses would be made up of a higher percentage of stock this time. The bank was expected to cut the cash component of bonuses between 5 and 25 per cent, depending on the amount of the payout.
“The revival in hiring is also evident from the fact that a lot of people who had moved out of jobs are getting newer opportunities now,” says Saket Jain, managing partner at Vito India, a specialised executive search firm for the investment banking and financial services industry.
The demand is mostly for those employees who bring in the clients for equity issues. This function in investment banking parlance is known as "capital market origination". According to stock exchange data, about 90 Indian companies have announced plans to raise about Rs 70,000 crore through this route alone.
The January-March quarter is expected to see fund raising of around Rs 30,000 crore, including government disinvestment of about Rs 23,000 crore in firms such as NTPC, REC and NMDC.
According to estimates given by investment banks, the next financial year is expected to see fund raising of about Rs 1,30,000 crore including qualified institutional placements, initial public offers, depository receipts etc. The government alone plans to raise another Rs 40,000 crore next year through disinvestments.
http://www.business-standard.com/india/news/bonus-season-over-job-churn-begins-at-i-banks/388342/
Tuesday, March 16, 2010
Monday, March 8, 2010
India Inc's overseas takeover party resumes after a year
India Inc's overseas takeover party resumes after a year
Abhineet Kumar / Mumbai March 5, 2010, 0:28 IST
Cross-border deals are back after a brief lull in 2009. And, investment bankers say 2010 is going to be the year of outbound deals.
The tide turned in February after a rather slow start in January, which saw 15 outbound deals valued at $341 million. Among the done deals was Renuka Sugar acquiring a controlling stake in Brazilian sugar maker Equipav for Rs 1,530 crore and Religare Enterprises buying a California-based fund of funds, Northgate Capital, for around Rs1,000 crore.
Reliance Industries' $14.5 billion bid for bankrupt chemical maker LyondellBasell would have been added to that kitty if the American company's board had not rejected the Indian company's overtures. Reliance, however, is pursuing a Canadian oil sands group, Value Creation, through a $2-billion bid that, bankers say, is likely to go through.
February also saw Bharti Airtel announcing exclusive talks to acquire Zain Telecom’s African assets for $10.7 billion (about Rs 49,000 crore). The fate of that deal will only be known later this month.
The month saw just one significant inbound deal — American Tower Company buying out Essar Telecom Infrastructure for Rs 2,000 crore.
Experts say one major reason for the possibility of more outbound deals is the fact that valuations of troubled overseas assets have risen enough for them to be willing to discuss options. Last year, they had no choice but to wait out, with valuations near all-time lows.
HANDS ACROSS THE WATER
Value in million $ 2008 2009 2010#
Cross Border 25739 5261 377
Outbound Deals 13193 1376 341
Inbound Deals 12546 3885 36
Domestic 5212 6702 2167
Total M&A 30951 11963 2544
#January Source: Grant Thornton Dealtracker
LARGE DEALS IN FEBRUARY 2010
BUYER COMPANY VALUE
OUTBONND FEALS
Renuka Sugar Equipav 329
Religare Enterprise Northgate Capital 200
Bharti Airtel Zain Telecom’s
African Asset* 10700
INBOUND DEALS
American Tower
Company Essar Telecom
Infrastructure 435
* Under discussion Source: Business Standard Research
“Deals never happen when valuations are much below their implicit value,” said Ajay Garg, managing director, Equirus Capital, a Mumbai-based investment bank. “As the global market improves, the targets are coming close to their implicit value and this is helping the deals get through,” he said.
The lull in outbound deals in 2009 followed three preceding years of outbound overtaking inbound with Indian companies acquiring foreign firms such as Corus, Jaguar Land Rover, and Novelis.
“Both Indian and companies abroad are now opportunistic and looking at deals,” said K Balakrishnan, managing director and chief executive officer, Lazard India, local arm of the global investment bank. “Circumstantially it is the right time for Indian companies to look for assets overseas available at attractive valuations, while companies abroad are still cautious with the global economy still on the recovery path,” he said.
In 2009, outbound deals fell short of inbound ones in terms of value. Some 82 outbound deals worth $1.37 billion were closed against 79 inbound deals valued at $3.88 billion.
The figure for outbound deals could have been higher but for the fact that many deals that were on the drawing board last year did not materialise. For example, Sterlite Industries attempt to acquire the US-based copper miner Asarco for $2.56 billion failed. Also Bharti Airtel’s second bid for South African telecom firm MTN in September 2009 fell through on account of regulatory issues.
“The confidence of Indian companies has returned and access to capital is much easier,” said Vedika Bhandarkar, managing director and head of investment banking at J P Morgan India, the local arm of the global investment bank. “Outbound deals will at least be equal to inbound deals this year” she predicted.
Companies such as Vedanta Resources, the holding company of India’s most diversified base metal producers, raised about $4.7 billion (Rs 21620 crore) in the current financial year through American Depository Receipts, Foreign Currency Convertible Bonds etc. The company says its group companies such as Sterlite and Sesa Goa are on the lookout for the right opportunities for inorganic growth.
In the current financial year, Indian companies raised at least Rs 41,000 crore from qualified institutional placements (QIPs) when the Sensex, the benchmark index of the Bombay Stock Exchange, rose about 75 per cent to 17,000 on Wednesday from 9,708 at the end of the last financial year.
According to stock exchange announcements, about 90 Indian companies have announced their intention to raise an additional Rs 70,000 crore through QIPs in the coming months. Easy access to capital markets has helped the companies de-leverage their balance sheets.
Experts suggest sectors like pharma, IT and automobiles will be the front runners as far as outbound deals are concerned. However, sectors like hospitality and steel also have a huge potential.”
A large proportion of outbound acquisitions by India Inc in terms of value has so far been in the North American region, which accounted for as much as 32 per cent of the total outbound deal value, followed by Europe, which that accounted for 23 per cent of the total outbound deal value.
Abhineet Kumar / Mumbai March 5, 2010, 0:28 IST
Cross-border deals are back after a brief lull in 2009. And, investment bankers say 2010 is going to be the year of outbound deals.
The tide turned in February after a rather slow start in January, which saw 15 outbound deals valued at $341 million. Among the done deals was Renuka Sugar acquiring a controlling stake in Brazilian sugar maker Equipav for Rs 1,530 crore and Religare Enterprises buying a California-based fund of funds, Northgate Capital, for around Rs1,000 crore.
Reliance Industries' $14.5 billion bid for bankrupt chemical maker LyondellBasell would have been added to that kitty if the American company's board had not rejected the Indian company's overtures. Reliance, however, is pursuing a Canadian oil sands group, Value Creation, through a $2-billion bid that, bankers say, is likely to go through.
February also saw Bharti Airtel announcing exclusive talks to acquire Zain Telecom’s African assets for $10.7 billion (about Rs 49,000 crore). The fate of that deal will only be known later this month.
The month saw just one significant inbound deal — American Tower Company buying out Essar Telecom Infrastructure for Rs 2,000 crore.
Experts say one major reason for the possibility of more outbound deals is the fact that valuations of troubled overseas assets have risen enough for them to be willing to discuss options. Last year, they had no choice but to wait out, with valuations near all-time lows.
HANDS ACROSS THE WATER
Value in million $ 2008 2009 2010#
Cross Border 25739 5261 377
Outbound Deals 13193 1376 341
Inbound Deals 12546 3885 36
Domestic 5212 6702 2167
Total M&A 30951 11963 2544
#January Source: Grant Thornton Dealtracker
LARGE DEALS IN FEBRUARY 2010
BUYER COMPANY VALUE
OUTBONND FEALS
Renuka Sugar Equipav 329
Religare Enterprise Northgate Capital 200
Bharti Airtel Zain Telecom’s
African Asset* 10700
INBOUND DEALS
American Tower
Company Essar Telecom
Infrastructure 435
* Under discussion Source: Business Standard Research
“Deals never happen when valuations are much below their implicit value,” said Ajay Garg, managing director, Equirus Capital, a Mumbai-based investment bank. “As the global market improves, the targets are coming close to their implicit value and this is helping the deals get through,” he said.
The lull in outbound deals in 2009 followed three preceding years of outbound overtaking inbound with Indian companies acquiring foreign firms such as Corus, Jaguar Land Rover, and Novelis.
“Both Indian and companies abroad are now opportunistic and looking at deals,” said K Balakrishnan, managing director and chief executive officer, Lazard India, local arm of the global investment bank. “Circumstantially it is the right time for Indian companies to look for assets overseas available at attractive valuations, while companies abroad are still cautious with the global economy still on the recovery path,” he said.
In 2009, outbound deals fell short of inbound ones in terms of value. Some 82 outbound deals worth $1.37 billion were closed against 79 inbound deals valued at $3.88 billion.
The figure for outbound deals could have been higher but for the fact that many deals that were on the drawing board last year did not materialise. For example, Sterlite Industries attempt to acquire the US-based copper miner Asarco for $2.56 billion failed. Also Bharti Airtel’s second bid for South African telecom firm MTN in September 2009 fell through on account of regulatory issues.
“The confidence of Indian companies has returned and access to capital is much easier,” said Vedika Bhandarkar, managing director and head of investment banking at J P Morgan India, the local arm of the global investment bank. “Outbound deals will at least be equal to inbound deals this year” she predicted.
Companies such as Vedanta Resources, the holding company of India’s most diversified base metal producers, raised about $4.7 billion (Rs 21620 crore) in the current financial year through American Depository Receipts, Foreign Currency Convertible Bonds etc. The company says its group companies such as Sterlite and Sesa Goa are on the lookout for the right opportunities for inorganic growth.
In the current financial year, Indian companies raised at least Rs 41,000 crore from qualified institutional placements (QIPs) when the Sensex, the benchmark index of the Bombay Stock Exchange, rose about 75 per cent to 17,000 on Wednesday from 9,708 at the end of the last financial year.
According to stock exchange announcements, about 90 Indian companies have announced their intention to raise an additional Rs 70,000 crore through QIPs in the coming months. Easy access to capital markets has helped the companies de-leverage their balance sheets.
Experts suggest sectors like pharma, IT and automobiles will be the front runners as far as outbound deals are concerned. However, sectors like hospitality and steel also have a huge potential.”
A large proportion of outbound acquisitions by India Inc in terms of value has so far been in the North American region, which accounted for as much as 32 per cent of the total outbound deal value, followed by Europe, which that accounted for 23 per cent of the total outbound deal value.
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