In part two of our series on local investment banks, we explore the bigger, mid-sized firms which are looking to create institutional templates that last. Another ambition: To become truly full-service deal makers
Avendus Capital is the hottest shop on the street when it comes to technology. Its marquee deals, such as selling Satyam to Tech Mahindra, Patni to iGATE or even BPO Intelenet to Serco, have catapulted Avendus into the league of global A-listers. Now, Gaurav Deepak (37), Avendus’s co-founder and managing director, needs to keep the wins coming, and, sometimes, in order to go about that, one has to do it the old-fashioned way: Research and keep your finger on the pulse of things.
In doing so, Deepak thinks he has found the ‘next big one’ — digital media and technology (DMT). “We felt in internet, mobile, enterprise hardware and software, there is enough critical mass coming out now and it will create enough value over the next 10 years,” says Deepak. “It, therefore, makes sense to invest today rather than a few years later when the market gets more mature and catches a wider fancy,” he adds.
The first thing Avendus did was to come out with an exhaustive sector report when none existed. It took six months to be prepared, but seems to have already paid dividends. Since setting up the DMT practice as a separate vertical with a dedicated leadership last year, the company has already closed four deals. “This will be a large practice for us,” feels Deepak.
“Avendus has a young team and our consumers are today’s youth. So, it’s easier for them to relate to our needs and take full ownership,” says Ashish Hemrajani, CEO of BookMyShow, for which Avendus recently raised funding from Accel Partners.
It is this approach to the market that helps the team stand out.
If betting on information technology (IT) and business process outsourcing (BPO) in early 2000 was a serendipitous call, the subsequent focus on consumer life sciences has been more premeditated and well thought out. Today, contrary to popular perception, Avendus is a thriving, full-service investment bank with proven capabilities beyond just technology transactions. “They were a tech-centric, boutique bank. But now, they have grown into a full-grown adult, with diversified capabilities,” feels Deepak Parekh, chairman, HDFC, who often doubles up as the firm’s mentor.
In the core technology space, analytics has been identified as a future growth driver and expertise is being built around it. After advising Wipro to buy Australia’s Promax Applications Group, the momentum is building.
But, all that would ultimately have to deliver value. And that’s where, Deepak says, the decade-long trust and equity helps. “About 75 per cent of our clients are Indian entrepreneurs and the rest are multinationals. Our business model and approach is to form long-term, value-creating relationships,” says Deepak.
To sustain this kind of engagement, Deepak and his top leadership team have realised what they need is a delivery mechanism that is institutional in nature — essential when you consider the pace at which business is growing. Adding to the urgency is the fact that the team, too, has mushroomed five times its size in just six years.
Still, Avendus says it wants to grow qualitatively. “We believe in a star team and not a team of stars,” clarifies Pijush Sinha, an executive director with the bank. “An organisation with pockets of excellence cannot scale up beyond a point and it will always be susceptible to greater risks.” Sinha, along with a handful of senior colleagues, is instrumental in creating a rigorous hiring and induction programme for Avendus.
When there is a paucity of mid-level talent in the market, Avendus seems to be reaching out for a sustainable way of grooming it “in an environment that allows them to stay on and grow further.”
As Gaurav Deepak points out, the average age of the firm is 32. “We believe that over the past 10 years, we have created a strong foundation on which to play a long-term innings. The fun is just about to begin.”