Malaysia’s CIMB hires the top i-banking & institutional equities team of RBS India
Within months of calling off a proposed deal to buy a part of Royal Bank of Scotland (RBS) in India as part of an international takeover, CIMB Bank has hired the entire top fleet of the business units and is now set to launch its operations through an organic expansion, a top source told VCCircle.
Part-owned by Malaysia’s sovereign wealth fund Khazanah, CIMB has hired the top executive team handling corporate finance, investment banking and equities at RBS India.
The international deal between the two, first announced on April, 2012, was modified in mid-2012 which struck off the India unit of the business due to legal issues arising in connection with the sale.
CIMB has absorbed the entire team of the said units, comprising some 55 people, from RBS and also brought in 10 new members. RBS is exiting its India business due to deteriorating market conditions and regulatory changes.
Such a move usually comes with a cost as hiring the team en masse means joining bonuses but in this case, CIMB has managed to pull it off on a ‘no-premium and no-discount’ basis, said a source privy to the development.
Devesh Kumar has been appointed managing director and country head at CIMB Securities while Anjani Kumar, who was previously head of corporate finance for RBS in India, will head CIMB’s investment banking business in India.
The new team also includes names like Biren Mehta, senior vice-president and head of institutional derivatives at Kotak Securities, who has over two decades of experience in the capital markets. Mehta is one of the fresh hires in the top team.
E-mail queries sent to CIMB and RBS regarding the development did not elicit any response till the time publishing this article.
The Malaysian bank is also setting up a quantitative research and future & options team, the source said.
After a failed acquisition, CIMB said it remained committed to having an Indian component to its Asia-Pacific investment banking platform.
Nazir Razak, group chief executive of CIMB, had earlier said, “We see this as a temporary delay in our Indian build-up as we will now have to follow the same process as Korea, which was excluded from the RBS transaction from the outset.”
CIMB would proceed to establish its own operations by applying for a new licence or purchasing an entity with an existing licence, he said, after the cancellation of the India deal.
When the acquisition was first announced, CIMB pegged the deal at £173.9 million, which would have made it emerge as the largest investment banking franchise in the Asia-Pacific region (ex-Japan). Without the India unit, the total acquisition cost got reduced to around £160 million, thereby valuing the India assets at £13.9 million.
While CIMB saved on its acquisition cost, it needed to start afresh, building its franchisee. However, this would be easier with the same team under its umbrella. Still, it would have to go through the process of regulatory approvals for starting its business as a new entity.
CIMB has presence in key ASEAN markets and representation in New York, London, Shanghai, Mumbai, Hong Kong, Colombo and Bahrain. It also operates through partnerships in Taiwan, Korea and Australia. The addition of the RBS units means CIMB will have a new on-shore presence in Taiwan and Australia, as well as substantially enlarged operations in Hong Kong, India and China.
(Edited by Sanghamitra Mandal)