Pvt, foreign banks ramp up equity mkts teams

Somasroy Chakraborty, Mehul Shah & Ashish Rukhaiyar
Mumbai, 3 August 2011

See long-term opportunity in the Indian markets, hire at the top level for future requirements.

Foreign and private sector banks in India are strengthening their equity capital markets teams, with top level hires, at a time when the equity issuances by domestic companies are fading due to volatility in local stock markets.

Bankers and industry analysts say the hiring spree is based on future needs, as these lenders see an opportunity in the Indian equities markets in the long run.

“You need to have a basic conviction that India is going to be a long-term growth story and, in the short term, it may have some blips. You also need to ascertain whether you have an equities business set-up, which can compete with the best. Once you have these two convictions, this is clearly the best time to build your business,” Standard Chartered Securities’ India MD & CEO Ratnesh Kumar said.

Standard Chartered roped in A Rajagopal, former head of equity capital markets in India, towards the end of last year to set up the equity capital markets business of the bank here. Rajagopal is currently the managing director and head of equity capital markets for the bank’s South and Southeast Asia operations.

Standard Chartered Securities has also reinforced its equities team in the past 12 months, recruiting senior officials in institutional research and sales. The headcount in its research team has been now increased to 20 people.

Royal Bank of Scotland (RBS), which has decided to exit from its retail and commercial banking businesses in India, is also in the hiring mode and is expanding its equity markets’ team.

“We are fully focused with our debt and equity capital markets teams by way of advisory, capital markets and financing. These will be integral part of that service and we will look at engaging with clients,” RBS CEO for Singapore and Southeast Asia and head of global banking and markets in India, Madan Menon, told Business Standard in an interview earlier this month.

The bank has hired 10 people across its research and trading desks, including a new head for its equities business. "To the extent we need, we will make appropriate investments in this market. There will certainly be more hiring,” Menon says.

Even private sector banks are not far behind, with the country’s second-largest private bank, HDFC Bank, appointing Rakesh Singh as the head of its investment banking division earlier this year. Before this appointment, Singh was the managing director and co-head of financing advisory at Rothschild.

Following this appointment, HDFC Bank managed its first-ever equity issuance, when it got the mandate as the co-book running lead manager for Muthoot Finance’s initial public offer (IPO).

These recruitments are happening at a time when volatile share markets have hit India Inc’s share sale plans, estimated to be over Rs 30,000 crore for this year. Several big-ticket IPOs, like those of Jindal Power, Lodha Developers, Reliance Infratel and Sterlite Energy, have been deferred as investors’ appetite remains low and promoters are unwilling to pare stake at low valuations.

In the first seven months of this calendar year, the number of first-time public offers by Indian companies stood at 24, compared to 64 in the 2010 calendar year, data compiled from Prime Database by BS Research Bureau shows. Companies raised Rs 4,738.45 crore from IPOs till July this year, compared to Rs 37,534 crore mopped up in the period last year.

“Most of these banks have deep pockets and they are betting big on India for the long term. Hence, it is not surprising to see hiring for equity capital markets teams in these banks rising,” a banking analyst with a domestic brokerage says.