Kampani ropes in Pandit for bank a/c

Mumbai: Nimesh Kampani, one of the top dealmakers in India during the 1990s till early 2000s, pulled off a coup on Thursday by getting on board Vikram Pandit, the India-born former CEO of Citibank, to push JM Financial's bid for a banking licence. Pandit, along with his Morgan Stanley colleague and hedge fund mate Hari Aiyar, will together invest nearly $210 million in Kampani-led JM Financial, the holding company, and two of its arms, a distressed asset fund, and a nonbanking financial services firm. Pandit and Aiyar will also pick up stakes in the bank, if it gets the licence from RBI, but the quantum of their stake would be as per the central bank's rules.
   In a statement to BSE, JM Financial said Pandit and Aiyar, along with Aparna Murthy Aiyar (Hari Aiyar's wife), will pick up a 3% strategic stake in JM Financial through preferential allotment of warrants for about Rs 45.4 crore. The duo will also invest another $100 million in JM Financial's distressed assets fund for a 50% stake. This investment will be from a fund floated by Pandit and Aiyar, in which several sovereign funds are investors, sources said.
   The Pandit-Aiyar combine will also invest another $100 million in the JM Financial's NBFC arm, again for a 50% stake, sources said. The company will nominate Pandit as the non-executive chairman of the proposed bank, the statement from the company to BSE said. As an immediate step, Pandit will be the non-executive chairman of the NBFC arm of the group, and take over the top post at the bank as and when that happens.
   In February, RBI eased rules for new banking permits by letting companies with a 10-year-track record to apply for licences and capped foreign ownership at 49% for the first five years. With this deal, Kampani-Pandit combine will now be vying with billionaires like Kumar Mangalam Birla, Anil Ambani, Cyrus Mistry and Anand Mahindra in seeking a banking licence.
   In Thursday's flat market, JM Financial stock jumped 16% on the BSE to close at Rs 23.55, with the day's high at Rs 24.35. At the day's close of trade, JM Financial had a market value of Rs 1,770 crore (about $300 million).
   Speaking to TOI, Kampani said he had known Pandit for over 15 years. "We go back a long way. He knows this sector and the international market very well. We can bring capital from abroad and help the group grow further," Kampani said. The veteran dealmaker also said that the people from both sides shared similar values and were confident about the association creating a "strong domestic financial services businesses with global best practices and reach".
   Speaking about his association with the JM Financial group, Pandit said that he believed in the long term growth prospects of India. "I have known Nimesh and JM Financial for over two decades and believe that, given the opportunity, JM Financial can provide the banking and financial services that the country needs," Pandit said. For the 56-year-old Pandit, who brought back Citigroup from the brink of financial collapse and later saw an unceremonious exit from America's third largest bank, the deal with Kampani marks a comeback into banking.
   JM Financial had a joint venture with Morgan Stanley in India, christened JM Morgan Stanley since 1997, till the two parted ways amicably in February 2007 to run independent businesses in the country. After the split, JM Financial lost some steam in the merger & acquisition advisory space. The firm was ranked 10 in last year's league tables, Bloomberg Data showed. The Kampani-Pandit partnership will help JM Financial to come back in the investment banking space in a strong position.