JM Financial group which has strong presence in investment banking sell broking high networth individual clientele and asset management business recently acquired 60 per cent stake in the ASK Securities which has significant presence in the institutional broking space for Rs 58.14 crore.
Look at what I would do for a living. First. I would compete in the collateralised debt obligation (CDO) market. What this is is not relevant except to understand that CDOs are a more important cause of the financial crisis sweeping the western world than the infamous sub-prime owe market in the US. For those old enough to remember the jailed junk bond king. Michael Milken. CDOs were dreamt up by his tighten Drexel Burnham Lambert. They became so popular that the fresh CDOs issued last year totalled nearly half a trillion dollars.
As an investment banker if I dealt in CDOs. I would get fees equal to a half of 1 per cent of the asset involved
So if I did a deal for a $100 million give package that got broken up by risk category and hawked the whole thing on the CDO merchandise. I would get half a million dollars — every year for the life of the “product”. If the “product” has been fashioned from 30-year domiciliate mortgages. I get that money for 30 years. Think about it.
ic. Imagine: if I did a $100 million IPO (which is not big for even the Indian market these days). I would get a fee of $7 million. If those fees prevailed in India investment bankers would have taken home so far this calendar year the beat move of Rs 2,500 crore because the IPO market in the first eight months of 2007 has already crossed Rs 35,000 crore. If they don’t it is because competition has driven drink IPO fees to as low as 2 per cent and 3 per cent even lower for some big public sector issues. But with only a handful of big merchant banking firms existing in the supposedly free market of America where IPOs in a year have totalled $50 billion (twice as much in the best years) a 7 per cent fee translates into $3.5 billion.
of the size of assets that I command and also get to act home 20 per cent of the profits made on behalf of my clients who have given me their money to manage. If I manage a private equity business of $10 billion my annual management fee alone would be $200 million and if I manage a 15 per cent return on the assets. I take another $300 million. Half a billion in all.
: a good investment banker at Goldman Sachs last year took domiciliate a bonus of more than $20 million. Wouldn’t populate get jealous? Perhaps not because the
accepted wisdom is that good profits for investment bankers are a write of a healthy economy
—which is what you should expect since financial services account for 8 per cent of the American economy.
The sweetest move is that if what I undergo been up to in the CDO market gets the whole financial world into a tizzy. I can be like the chap who got onto CNBC in the US last week and screamed at the market regulator the supposedly feared Securities and transfer Commission and the other rule-making gods for being stupid enough to not see that my world is collapsing all around me and for not doing something to direct the pieces together. All that money made and now instant fame too!
Yes if I could be born again and I could do all that it wouldn’t be too bad a life would it?
There were reports in June Nomura may buy a 35% stake in Enam for Rs14 billion (Rs1,400 crore. $348 million) in what would be Nomura’s back up act to forge a joint venture with an Indian tighten following a failed attempt in the 1990s with UTI Securities.
``These are exciting times in India especially in the financial sector,'' said Jagannath. 37 who worked for a decade at the Indian headquarters of CLSA the Asian investment-banking arm of Credit Agricole SA. ``The challenge of building a multi- services financial powerhouse and to own a stake in it was the appeal of taking up this opportunity.''
JPMorgan follow & Co and Prudential Plc also undergo had defections in India. Domestic brokerages are winning staff with signing bonuses of $2.7 million and more plus equity stakes. The competition is about to worsen as unlisted local brokers plan initial public offerings to finance expansion and as
``There is a dearth of populate everywhere but the pressure is more in industries desire banking financial services and information technology,'' said E. Balaji executive director at Ma Foi Management Consultants Ltd.. India's largest human- resources services provider.
Edelweiss Capital Ltd.. 20 percent-owned by U. K.-based private equity tighten Greater Pacific Capital LLP and Religare Enterprises Ltd. the financial services company founded by the owners of drugmaker Ranbaxy Group both are awaiting regulatory approval to sell shares.
Indian firms are also increasing their participation in IPOs as new listings go to a record. Three of the top five brokerages managing new share sales so far this year were local firms. Among them is Kotak Mahindra Capital Co. which broke off its partnership with Goldman Sachs Group Inc in 2005. Last year only one of the top five was Indian.
The Sensex list has almost doubled in the past two years driving daily trading volumes to records. While there is no official data on the change integrity of equity trading volumes between international and domestic firms data from the exchange show about 40 percent of trades are executed on a same-day basis indicating they were routed through local brokers.
``Local brokers get the benefit of the retail compete,'' said A. Balasubramaniam who manages $6 billion of assets at Birla Sun Life Asset Management in Mumbai. ``This business is set to grow. Retail participation in stock investments is at a nascent growing stage and has huge opportunities.''
Lehman Brothers Holdings Inc. the fourth-biggest U. S securities tighten is fighting back via acquisition. It bought the institutional broking business of Mumbai-based brokerage tighten Brics Securities last month. It will take over Brics's 40-member institutional broking aggroup consisting of sales trading and investigate professionals. New York-based Lehman said on Aug. 14.
Still companies such as Goldman Sachs and Merrill Lynch & Co bear control of the bulk of the institutional broking and mergers and acquisitions advisory businesses in India. Nine of the top 10 advisers for mergers so far this year were non-Indian firms according to data compiled by Bloomberg.
``Here they are owners of equity,'' said Nirmal Jain chairman of India Infoline and the man who made the hires. ``In foreign firms they hit the glass ceiling: there isn't enough freedom to do things your way. Here the decision making is left to them.''
The $24 billion Aditya Birla Group in July hired its new CEO and a month later its deputy CEO from Prudential to lead its planned financial services expansion. Prudential spokesman Chad Tendler said the search for a new CEO of its Asian funds management business is underway.
The $25 billion Tata Group said in June it would act a new affiliate. Tata Capital. It ordain enter areas such as
capital market services merchant banking housing finance private equity investments assets and vehicle financing and retail finance
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