He has been a father-figure for most employees at DSP Merrill Lynch (a firm he started in 1975 when it was just known as DSP Financial Consultants). But Hemendra Kothari prefers to be called a “brother-figure” - as someone who helped his siblings realise one basic thing: At the end of the day, what makes the difference between a winner and a loser, is the efficiency of service and a belief that you are not in a sprint but in a marathon.
His own “marathon” as one of India’s ace corporate dealmakers is about to end, with Kothari slated to exit DSP Merrill Lynch on March 31, after selling his remaining 10 per cent stake in the firm to the new owners - the Bank of America. The final announcement didn’t come as a surprise as everyone knew this was coming ever since his long-time partner (Merrill Lynch) exited and Bank of America came into the picture.
Kothari had sold a majority of his stake in the firm about four years ago, when it was clear that the big boys of finance wanted more control in Indian merchant banking firms. Yet, he continued as the chairman as his partners didn’t want to let go of his legendary skills and his proximity to the who’s who of India Inc. In fact, DSP Merrill Lynch was a rare venture for Merrill as it held a minority stake and even shared its name with an Indian partner. Merrill hasn’t done this anywhere else in the world.
Kothari says he has been thinking about his exit for a while and had kept all his employees informed of his plans. But when the day of reckoning finally came, there was a near-consensus among his colleagues — life will never be the same again without Hemendra bhai.
The world of finance agrees. Kothari, 62, was the first to give an international identity to a family-run broking firm and left on his own terms. Look at the range of deals that he conceptualised: In 1999, he was instrumental in brokering a path-breaking Rs 499 crore all-cash deal when Satyam Infoway bought Internet start-up India World. Though the deal was panned later, as many thought the start-up was hopelessly overpriced, it was the first deal of its kind in the internet space.
His firm was also the advisor to the first restructuring deal for a state-owned power utility (Orissa Power) and brokered the first hostile takeover in the cement business (India Cements’ takeover of Raasi).
Then there was the India Fund, which was UTI-managed and created by Kothari’s firm — again a first of its kind at that point in time. When ICICI wanted to raise capital in 1999, it spoke to only one investment banker — Kothari. In an innovative fund-raising move, DSP Merrill did a Yankee bond issue and in the same year, brought out six bond issues in India. Plus, it did monthly private placements and later, an ADR issue.
The smartest deal of his career was of course the one he did with Merrill. Proof: In 1995, Merrill reportedly bought a 40 per cent stake in his firm for $30 million. Ten years later, it paid him almost 17 times that amount.
Kothari doesn’t plan to severe his links with the wild world of finance completely and will continue to remain the non-executive chairman of DSP Blackrock Investment Managers, where he holds a 60 per cent stake. But it is clear that he would prefer to spend more time in the other wild forests, the conservation of which has remained a passion with him for quite some time now.
So even as the bulls and bears miss his presence, the tigers would perhaps feel more safe and happy (Kothari has been associated with the tiger protection movement for quite a while now). “The tiger is powerful, but it does not display aggression needlessly,” Kothari said recently. His friends and siblings in office would remember him fondly for roughly the same qualities.
