Essel Group forays into investment Banking, private equity

Sets up a news financial services arm, Amit Goenka joins as CEO

The $4-billion media conglomerate Essel Group has made a foray into financial services sector in India.

As part of the entry, the Subhash Chandra-owned group has set up a new arm- Essel Financial Services Ltd. The group has roped in Amit Goenka, former national director, capital transactions, at advisory firm- Knight Frank as managing director and chief executive of Essel Financial Services.

Essel Group has set up two businesses - private equity and investment banking under the names of Essel Finance Managers and CAPSTAR respectively under the holding company- Essel Financial Services.

CAPSTAR, with its focus on deals in infrastructure, real estate and financial services sectors, has appointed about 15 people in its team and set up four offices across the country - Mumbai, Noida, Bangalore and Delhi. CAPSTAR is also in process of opening two more offices in Chennai and Pune. CAPSTAR will focus on mergers and acquisitions (M&As), pre-IPO deals, qualified institutional placement and portfolio management services currently.

The group has appointed Abhinav Bhushan, former head equities - capital transactions at Knight Frank India to head the I-Banking division - CAPSTAR.

It is learnt that CAPSTAR has developed a pipeline of deals worth Rs 2,000 crore with focus on project sales in infra and real estate space.

After covering domestic markets, CAPSTAR also has plans for global expansion with opening offices in Singapore and London by 2013. However, Amit Goenka said that company is not looking for any joint ventures or alliances with global banks at present.

Apart from I Banking, the group is launching a private equity fund under Essel Finance Managers. It has appointed Sumit Kumar of Beekman Helix India to head the PE fund. Details of PE fund are not known yet.

Amit Goenka, MD & CEO of Essel Financial Services said, "CAPSTAR is a focused player with ability to transact on mid size to large deals in specific sectors such as real estate and financial services. A pan India footprint and global reach, backed by specialists with deep sectoral experience, allows clients to reap quick rewards on their transaction objectives. We can also selectively invest in the deals where we advice."

According to Goenka, the rationale behind Essel Group's recent move is to further leverage on the brand reach with investors, consumers and institutions.

Essel Group has presence in areas of media (Zee Entertainment Ltd, Zee News Ltd and DNA), Technology (Dish TV, Wire & Wireless India), Packaging (Essel Propack), Entertainment (Playwin, Fun Multiplex), Infrastructure (Essel Infraprojects, E-City Real Estate, Siti Energy Ltd) and Education (Zee Learn).

Though Indian Inc has seen a decline M&A activity in 2012, the slight improvement in M&A deals in Q3 2012 brings hope in the investment banking industry. According to E&Y report, India’s M&A deal value for 2012 reached $31.4 billion, which is a slight decline from $36.6 billion in 2011. In terms of deal count, 2012 recorded a total of 809 deals, as compared to 880 deals in 2011.

"3Q12 witnessed a strong surge in the M&A activity and may be an indicator of the return of the market’s appetite for deal making. This momentum in M&A is expected to continue in 2013. Indian companies, which played the waiting game in 2012, have accumulated huge cash piles," say the report.

Comeback of IPO market by the end of 2012 with the listing of Bharti Infratel also bring reasons for cheer to I-Banking industry in India.