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July 31, 2012

The rise of boutique investment banks

Business Today has a cover story on the phenomenon.

Among the "bigger boutiques", Veda Corporate Advisors, set up by C. Venkat Subramanyam and M. Vinod Kumar, who have been together for 20 years, through three jobs and two entrepreneurial ventures, has 20 people. Jacob Mathew, M. Ramprasad and Ajay Garg left DSP Merrill Lynch to start MAPE Advisory, which has 38 people. And Equirus, which came into existence when Garg left MAPE to start his own outfit, has 40, half of them in investment banking and the other half in institutional equity

...In fact, boutiques are the ones really active in the ring right now, feasting on deals of Rs 50 crore to Rs 200 crore, which is the range where the action is. They charge the same percentage as fee that the big ones do, but get by happily in spite of the low absolute amount, a result of the smaller deal sizes, because their expenses are far lower.

...It is not just the lower expenses that make boutiques click with clients. All six that BT spoke to insisted that their clients loved them because they were always there for the clients, mentoring them, the senior partners giving them unwavering attention from the beginning to the end. Often they cajole the client to look at new areas, and offer to raise funds to finance the foray. All this invariably results in long-term relationships, as opposed to a transaction-based one.

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