Late to the party, global banks try to muscle into India's start-up boom

Sun May 10, 2015 5:32pm EDT
 
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By Sumeet Chatterjee

MUMBAI (Reuters) - Global investment banks are scrambling to get a piece of the action from India's booming technology start-ups, having missed out on the initial flurry of deal-making to their better-connected but much smaller domestic rivals.

Banks including Goldman Sachs Group Inc, Citigroup and Morgan Stanley are looking to hire more bankers in India and are now regularly attending "bake-offs" to pitch for advisory roles on deals, according to several banking industry sources.

Foreign money has been pouring into India's fast-growing e-commerce sector, with investors ranging from Japan's Softbank Corp to Singapore's Temasek Holdings [TEM.UL] and GIC Private Ltd [GIC.UL] piling in.

Many large global investment banks have stayed away from work in the emerging sector though due to the relatively small deal sizes.

Now they are stepping up efforts to build relationships while the companies are still young - learning lessons from China where many of them are struggling to compete with small boutique banks as Internet deals pick up speed.

"Several of these companies will be large IPO candidates in the next 12 to 24 months, so the big banks have to start positioning themselves for this," said Harish HV, a partner in India at advisory firm Grant Thornton.

The number of venture funding deals for technology start-ups in India in the first quarter of 2015 was the highest in nine quarters and exceeded the number of such deals in China, according to data from CB Insights. The total value of investments in India topped $1 billion for the third straight quarter.

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Employees work at the reception desk of the Avendus office in Mumbai, India, May 7, 2015.    REUTERS/Shailesh Andrade