When the funding for the Tata-Corus deal was being finalised earlier this year, Citigroup was nowhere in the picture. But when Tata Steel [Get Quote] finally handed out the mandate for the takeout of the $7.1 billion bridge loan last month, it was Citigroup that bagged it.

In fact, two of the three original bankers that had arranged the loan, did not even figure in the takeout, though they were European banks. The moral of the story, Pramit Jhaveri, managing director, Citigroup Global Markets, tells Shobhana Subramanian, is that it is not enough to have the ability to write out a cheque; one must also be able to give the client the best possible deal. Excerpts:

In 2006 your M&A advisory market share was just 9 per cent, although you were number one in the equity sweepstakes. In 2007 too, Citigroup has not been able to bag the really big deals. Does that hurt?

The reality is that it is our aspiration to be number 1, 2 or 3 in any given year, in either equities, debt or M&A. And therefore, even if one significant transaction gets done away from you, it hurts you. You have to be part of the big deals, because they will constitute a significant part of the volumes at the end of the year. Sure, we would have liked to be a part of the Corus transaction; we were not because we were working with another bidder.

But we did manage to be an important member of the funding team and we also played a role in the Essar-Vodafone and Whyte&Mckay deals.

But investment banks don't make too much money on the bigger deals, do they?

That's not really true. It's not only important to us to be first, second or third in the league tables, it's more important to be 1, 2 or 3 in terms of fees. We'd like to believe that over the last three or four years, we've been up there in terms of fees, though in the league tables, we might have been lower down in the pecking order. Sometimes we have to do some business that may not be attractive in terms of fees. But it's good to have a well-rounded mix.

With a host of global investment banks looking to set up shop in India, are companies spoilt for choice?

Virtually every big player is here now and there are more coming in. But I feel there's room for a mix of universal players, monolines, niche players and boutiques. The Indian market is big enough and will continue to grow at a rate to support more players than exist today. But there will be a correction sometime and it will be interesting to see how some of these players respond to that.

So how does one play this game?

Institutions that have a global platform, that don't depend on individual relationships, that can provide the balance sheet and are able to come up with ideas, will do well. And those that have experienced teams and share the rewards with them will do well as against those where individuals get a disproportionate share.

So are banks that can write out cheques better positioned than boutique firms?

It certainly has its advantages but I think there is room for all models. And it's not just about debt, there will also be room for those that can write out cheques for equity. Some banks have an active proprietary book. We're committed to investing about $1 billion in the Asia-Pacific region.

What is your estimate of the size of the fees to be made in the Indian market?

We do make estimates but the problem is that these have got outdated very quickly in the past. Our own business has grown 60-70 per cent a year for the last four-five years and we would like to believe we're gaining market share.

In all of 2006, Indian companies raised $18 billion of equity. In the next 60 days they will raise $12 billion. And the total fees in 2006 were about $350 million; three years down the line, the numbers could be significant, as big as China's perhaps.

Do you think asset valuations for overseas acquisitions are a trifle stretched?

This is a point of view that has been often expressed. We're in an extremely robust M&A environment globally and the reality is that valuations globally are expensive. In the last 12-18 months financial sponsors have been the most active in M&A. Are these multiples high? Yes, but the reality is that those are the valuations that exist if you want to get a transaction done.

Also, the acquisitions have been made by experienced firms which feel there are synergies to be unlocked. So, I think it's a little too early to sit in judgement on them.

Do you believe the deal flow overseas will slow down because free cash flows of many companies as also the potential to leverage have been used up to a great extent?

Take a sample of India's top 75-100 companies. They are generating strong free cash flows, they are yet underleveraged and they're trading at very high market multiples. So, there's reason to believe that capital will continue to flow from India for acquisitions.

Why do you think consolidation in the domestic market is not happening as one would have expected, given that conglomerates are not in fashion?

It's a problem peculiar to India. There are a number of sectors where you could argue for some degree of consolidation. However, because we have been in buoyant markets for some time and capital and liquidity are available, there is no overriding pressure for players to sell out. In the past consolidation has been driven because sectors didn't do well.

Why do you think the Qualified Institutional Placements segment hasn't taken off ? Is it because there's too much P/E money coming in at higher valuations?

There are some technical nuances with QIPs, such as the Sebi floor price and the limitation of 49 investors, that need to be reviewed. But you have to look at the QIPs in the context of the GDR market and the number of GDR issues has fallen. I don't think P/E money is replacing the QIPs segment, though its true that a lot of P/E money is coming in.