As the Wall Street is getting reshaped with the chain of events such as Lehman's collapse and Goldman and Morgan Stanley abandoning i-banking model, the Indian investment banking industry too is going to witness a new pecking order.
According to the latest M&A league tables of Thomson Reuters, the new leaders in Indian investment banking are Nomura Holdings (which acquired Lehman Brothers' Asian operations including India) and Bank of America (which has agreed to buy Merrill Lynch).
While the sheer dominance of DSP Merrill Lynch in deal intermediation pitch forks BofA at the number two spot, Nomura is a bigger gainer. The Japanese firm shot into the limelight this year with its involvement in the Daiichi Sankyo-Ranbaxy deal and if Lehman India's figures are added then Nomura becomes the top M&A advisory firm in India this year by the value of deals.
The duo have been involved in deals worth $9.4 billion in India this year (January-September) either from the buy or the sell side. Riding on the back of DSP Merrill Lynch, BofA comes second with $7.99 billion even as on its own it was involved in an deals worth an insignificant $230 million.
The two firms are much ahead of other biggies such as RBS-ABN Amro, Citigroup, Deutsche and even ahead of stars of last year Goldman Sachs and Morgan Stanley. The significance of their rise can be fathomed by the fact that in 2007, BofA and Nomura were not even among the top 20 players individually.
At an individual level, Merrill Lynch tops the league table, having been involved in the marquee deals such as Idea-Spice, UTV-Disney, Aditya Birla Telecom-Providence, Aviva-WNS, Idea-Telekom Malaysia etc.
In M&A fees league table, Merrill Lynch is leading the charts with $25 million, it was followed by Nomura ($15 mn), Goldman Sachs ($11.5 mn), JM Financial ($10.5 mn) and Deutsche Bank($8.5 mn).
The Changing Landscape Of MNC Investment Banking
Now that the turf is open for many new entrants with the old banks giving way, we are going to see a lot of new players getting active. In institutional broking, the MNC banks such as CLSA, Deustche Securities, JPMorgan, Goldman Sachs, CSFB and BNP Paribas - not necessarily in that order - could be the gainers in marketshare. A source told VCCircle that the biggies like Morgan Stanley, Merrill Lynch and UBS would be the losers on the broking side.
Some of the participatory note clients of Lehman Brothers has moved to banks like BNP Paribas and Daiwa Securities. Nomura is launching its institutional broking business next month, while Daiwa Securities, a subsidiary of Daiwa Securities Financial Group, commenced its broking activities in July this year. "The clients are looking for a safe balance sheet," said head of a MNC i-bank.
On the investment banking side, Merrill, Goldman Sachs are all up there. With the hiring of Kalpana Morparia (from ICICI Bank), JPMorgan is set for a strong innnings. BNP Paribas is yet to start its investment banking business, while CLSA recently lost its head J Niranjan to Tata Capital.
On the fixed income side, Goldman and JPMorgan will have strong presence, while on the equity derivatives side, Deutsche Securities is extremely strong. BNP Paribas is expected to kickstart its derivatives business shortly.
The other major players are RBS-ABN AMRO, but they are believed to be still struggling with the integration issue.