Growing business opportunities fuelled by a robust economy and an increasing number of private equity investors are prompting investment bankers to quit their jobs and turn entrepreneurs.
In recent months, several investment bankers have quit their high-profile jobs at Goldman Sachs and Merrill Lynch to float their own boutique investment banks or private equity funds.
In a short-span of time, firms such as MAPE Advisory, founded by three ex-DSP Merrill Lynch executives and Advendus Advisory floated by former executives of ICICI, Kotak Mahindra and Communications Equity Associates, a Tampa-based boutique investment bank, were able clinch several multi-crore deals for clients. Princeton Advisors, whose founders include two ex-Goldman Sachs bankers, is concentrating on small and mid-sized deals.
The most notable success story in the industry is that of Ashok Wadhwa, who left his high-profile job at consultancy major Arthur Anderson to float Ambit RSM some years back.
But Edelweiss Capital, founded by two ex-ICICI officials Rashesh Shah and Venkat Ramaswamy, is perhaps the fastest growing financial services firm among the lot.
Recently, Amit Chandra, high-profile head of global markets and a board member at DSP-Merrill Lynch, quit to float a private equity fund with Mckinsey's Rajat Gupta, while another Merrill executive Munesh Khanna quit the same firm to float a $300 million buyout fund along with Narayan Seshadri, formerly head of Andersen Business Consulting in India, and Abhay Soi, who oversaw the financial restructuring group at Ernst & Young.
"I think the urge to do something on our own was the most driving factor behind the formation of MAPE Advisory," said Jacob Mathew, who along with colleagues in DSP-Merrill Lynch Ajay Garg and Ramprasad M, founded the company.
Some of the big deals done by MAPE include Godrej's acquisition of Nutrine, Wipro Infotech's acquisition of 3D Networks and India TV's private equity deal with Com Ventures.
"The contacts and relationships which we established over the last several years are helping us win deals," said Jacob, who as vice-president (M&A) at DSP Merrill Lynch was involved in landmark deals including acquisition of Coats Viyella's garment business by AV Birla Group, sale of Burnol & Coldarin brand assets, Dr Reddy's buy-out of American Remedies and sale of Diamond Dyechem to Ciba AG.
Investment banking and private equity sector are attracting several players as Indian companies target ambitious plans, riding high on the over eight per cent growth of the domestic economy. In recent times, Goldman Sachs and Morgan Stanley ended their partnerships with domestic investment banks Kotak Mahindra and JM Financial respectively to expand fast in the country.
"I think, the market has space for everyone. Many small and mid-cap companies cannot afford to approach a Merrill Lynch or a Morgan Stanley. We are looking at smaller deals," said Hem Tejuja, partner of Princeton Capital Advisors.
