Boutique investment banks are a recent phenomenon and emerged more as an answer to the market-demands by startups and smaller enterprises. By small we mean deals less than Rs 200 Cr that large investment firms like JM Financial, JP Morgan, Goldman Sachs or Morgan Stanley find enviable.
Most large banks have large boards and payouts that make them cater to markets with large value and commissions of 0.5 to 2 % on value as their retainers. Small enterprises needing 10 to 100 Cr formed an encashable niche market for boutique investment firms who offered them the services the big banking investment firms refused.
A boutique investment firm will happily offer the same and maybe better services in the fields of fund-raising, bank debt, private equity, managing IPOs and advising on acquisitions, mergers and everything in between. From among the dozen or so firms that have grown overnight literally, we formed a watch-list.
Our favourites on the watch-and-learn list are:
CV Subramanyam founded Veda Corp in 2003. Veda struck its first deal in 2004. They convinced Carlyle to partially buyout Newgen, a technology company for 10 million dollars. Since then there has been no looking back. They have done around 70 deals with a total business of 1.5 billion dollars. Veda is not very big and has a team size of 20 persons and offices in Bangalore, Hyderabad, Mumbai, and Chennai. They focus on South India where conservatism prevails, and businesses prefer to raise their funds in debt form rather than trade in equity.
Ripple Wave founders Mehul Savla and Vipul Shah started off in 2008. By May 2010 they had struck their first big deal. With over Rs 650Cr in just 3 business deals and a team of 4, this boutique investment service is going great guns.
MAPE started in 2001 by Jacob Mathews saw success in the same year. They have done business worth a whopping 3.5 billion dollars over 90 or so deals with a perhaps larger team size of 90.
The year 2008 saw Cogence Advisors founded by Rishi Sahai. Two months later they struck their debut deal. With a team size of 6, they have achieved 650 million dollars business over just 12 deals.
Equirius Capital also founded in 2008 by Ajay Garg had to wait till 2008 for their first successful deal closure. They have a volume of Rs 6,300 Cr in business over 52 deals and a team size of 20.
P2P set up its offices in India under Francois Montrelay. Their first deal came through in a few months in 2008 itself. Their business volume is over 100 million dollars and is single-handedly managed by Montrelay himself.
Looking at our watch list, we find that if the big investors don't wake up, they’ll find themselves edged out of the lower end (and small financing markets) by such boutique firms who are lean enough to make high profits on smaller deals. Money earns more money they say!