Busy Bankers Battle For Gail Bonanza

Money... Its a crime. Share it fairly, but dont take a slice of my pie, sang Roger Waters in 1973. Today, some rather well-heeled men and women in pin-striped suits, who lipsynched Waters almost a quarter century ago, couldnt agree more. Theyd prefer to skip the crime bit, though.

For the head honchos of the 20-and-odd investment banks which have been invited to the beauty parades a series of presentations made by bankers who want to convince those who matter that they are the very best the days couldnt get busier.

Starting with 6 am breakfasts, after two hours of sleep, to sandwiches and coffee masquerading as dinners, the top investment bankers in the country are certainly earning their six-figure dollar salaries.

 

The hectic activity behind closed doors of executive rooms in the Capitals priciest hotels promises to continue until Thursday. Thats when the beauty parade of investment bankers eyeing the Gas Authority of India Ltd (GAIL) global depository-cum-initial public offering (GDR-cum-IPO) ends. The parade started yesterday. Leading the meetings are top names in the finance fraternity: Lehman Brothers Ajeya Singh, son of Janata Dal supremo V P Singh; Hemandra Kothari and Shitin Desai of DSP Merill Lynch; Uday Kotak of Kotak Mahindra-Goldman Sachs; Alok Sama of the much beleaguered (dont even mention the failed BPL American depository receipts offering) Morgan Stanley-Dean Witter.

Says one investment banker, whose irritation comes through on being called to the phone from what must be an ulcer-inducing meeting, Yes, we have been a little busy for some time now... two-three weeks at a stretch. Its not every day that issues of this size happen. He is referring to the approximately $500 million (Rs 1,800 crore) GAIL issue and the $800 million (Rs 2,880 crore) Mahanagar Telephone Nigam Ltd (MTNL) GDR-cum-IPO. The beauty parade to the MTNL issue ended last Thursday.

The finance pros expect to make some $35-40 million (Rs 126-144 crore) while helping the public sector undertakings rake in the promised $1.3 billion (Rs 4,680 crore). In fact, the competition among the bankers is so high that there is talk of a reduction in the normal three per cent fee they charge on such transactions. Says a source who has followed the MTNL beauty parade closely, The three per cent fee norm could easily fall in the issue. Globally, the norm is that as the value of the offering goes up, the lead managers cut comes down. For the MTNL issue, there are two strong reasons to believe this will happen. One, the size of the issue is large even by global standards. Two, the investment banks are desperate to get a foot into issues from India because those slated for the future are huge.

However, no one believes that the battle of the sweepstakes is over with the beauty parades.

The real action (read: wheeling dealing, roping in useful political contacts...) will begin when the government announces the names of the short-listed investment bankers, says a source. Sources snidely refer to the VSNL $513 million (over Rs 1,840 crore) GDR-cum-IPO when communications minister called for fresh beauty parades although the three global coordinators had been decided.It was alleged then that this move was initiated to accomodate Lehman Brothers.

The MTNL and GAIL taskforces are expected to suggest the shortlisted names and the core group is to take a final decision before the end of the month. Until then, it is sleepless nights for the Waters fans.