Vikram Pandit to steer JM Financial bank foray - Daily News & Analysis

Exactly 7 months after he was sacked as the CEO of Citigroup, the world's 4th biggest bank, Vikram Pandit is set to steer something 400 times smaller: JM Financial, the homegrown financial firm. It will be, purely figuratively speaking, a huge comedown for Pandit: The Citi he ran till last year had revenues of $70 billion (Rs 378,000 crore) and profit of $8 billion (Rs 43,200 crore). JM Financial? `874 crore and profit of Rs 121 crore. The firm founded by Nimesh Kampani, one of the legends of India's Deal Street, on Thursday announced Pandit will make a strategic investment in JM Financial with potential additional investments in the group's non-bank, the proposed bank and a joint distressed asset fund. Pandit will steer JM's foray into banking, apart from strengthening the company's existing lending and financing business. At its board meeting on Thursday, JM Financial approved a strategic investment equal to 3% stake by  Pandit and Hari Aiyar, a former colleague of his at Morgan Stanley, through an issue of warrants. Both will also have a right to buy shares in the proposed bank later. JM Financial will issue a total of 2.33 crore warrants at Rs 19.50 per warrant. While Pandit will get half of the total warrants, Aiyar and Aparna Murthy Aiyar will get a fourth each. Both Pandit and Aiyar & Co will invest Rs 22.71 crore each. The board also approved making an application for banking licence in accordance with the Reserve Bank of India (RBI) guidelines and nominating Pandit as the non-executive chairman of the proposed bank. Pandit and Aiyar will have the right to purchase shares up to the amount prescribed by the RBI in this entity. JM Financial will also nominate Pandit as the non-executive chairman of its non-bank. Pandit will be responsible for raising $100 million through global funds for expansion of the lending and financing business. Also he will help in the formation of distressed asset fund which will be jointly set up by JM Financial and Pandit's firm with an initial target capitalisation of $100 million. Speaking on the deal, Pandit said he continues to believe 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," he said. JM Financial along with Morgan Stanley had started a brokerage and an investment bank in India in 1999 and their association continued till 2007. JM bought out Morgan Stanley from the investment bank, while Morgan Stanley bought JM out of the brokerage. The net result was the Kampanis were about Rs 1,500 crore richer. On Thursday, Kampani said he was enthused by the deal and feels the proposed association will create strong domestic financial services businesses with global best practices and reach. "We are very excited to have Vikram as a strategic investor," said Kampani. The stock of JM Financial on Thursday surged nearly 20% during the day before closing at Rs 23.55, up 16.01% on the Bombay Stock Exchange. via Top Stories - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNEpPrgfy0irXxGCIMURtsgQO93rsg&url=http://www.dnaindia.com/money/1835838/report-vikram-pandit-to-steer-jm-financial-bank-foray

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