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Contn. Deal-Meister
Fast On the Draw The man's guile coupled with his depth of knowledge-in this case of the takeover code-came to the fore when he defended aluminium major Alcan, when Sterlite Industries' Anil Aggarwal made an open offer for the Canadian multinational's Indian subsidiary. The aggressive and streetsmart Aggarwal was looking for a 51 per cent acquisition and Alcan was countering the hostile bid with a counter-offer that would take its stake up from 34.6 per cent to over 51 per cent. Now the fate of Indal hinged largely on the institutions-IDBI and UTI-that were sitting on a 55 per cent holding, and willing to offload their stake to whoever made the best offer. After a couple of bids and counter-bids, Sterlite upped the stakes with its third open offer of Rs 131 per share in cash plus preference shares, which meant that the total offer was valued at roughly Rs 220 per share. This was pretty much more attractive than Alcan's earlier counter-bid of Rs 175 per share. Kampani talked to the FI heads (S.H. Khan and G.P. Gupta) who, for their part, felt that Rs 175 wasn't good enough, and that Rs 200 (all-cash) was what they were looking for. Kampani had lost this one. So was the feeling in the market, on the last day of the open offer. But the JM founder had other ideas. When markets opened that day, Kampani called up the two FI chairmen and told them that by 10.50 a.m., he would have a new offer. And here's the masterstroke. Just before that he had arranged to buy a block of 15,000 shares of Indal at Rs 200 per share from an investor. As Dalal Street got into action, Kampani put a trade on the floor (acting in concert with Alcan, as per the takeover code) at 10.30 a.m. and purchased those shares. ''I called the FIs at 10.40 a.m. and told them that the stock price of Indal was now revised to Rs 200, and that should be treated as our offer price.'' By 11.30 a.m., the institutions had agreed to offload their holding to Alcan. The Canadian company's new offer of Rs 200 in cash was now more attractive.
That's one mandate that still gets Kampani animated. ''The timing was crucial. If we had the offer earlier and not on zero day, Sterlite would have had time to react.'' Kampani, however, can't repeat that trick again. After his eleventh-hour rescue act, SEBI amended the takeover code and now doesn't allow the price to be revised seven days before zero-day. Incidentally, Kampani was on the committee that took the decision. Indeed, striking when the iron is hot has always been Kampani's forte. Consider Ambuja's acquisition of 14.44 per cent in acc (in two phases) from the Tatas a couple of years ago. Around that time Lafarge was aggressively on the prowl, having already acquired Tisco's cement unit. The Tatas had already approached the French cement major and Larsen & Toubro for a possible alliance. The fear amongst the Indian cement majors was that if ACC's 11.5 million tones went to Lafarge, the French MNC would rule the roost. ''There was a fear psychosis,'' recollects Kampani. It was this that resulted in Ambuja being willing to shell out all of Rs 370 per share or (Rs 5,455 per tonne) for its stake in acc, making it the most expensive cement acquisition in India. Once again, Kampani was at the right place, at the right time, at the best price. The Good And The Best So is Kampani the best? Don't forget DSP Merrill Lynch, which has done mega-deals of its own, Satyam Computer's $141-million ads offering and Zydus Cadila's acquisition of 27.7 per cent in German Remedies being two of the more recent ones, and the Rs 500-crore acquisition of Indiaworld by Satyam Infoway being the more (in)famous one. ''We're of the same vintage,'' is how Shitin Desai, Vice Chairman, DSP Merrill Lynch, puts it. ''We have the same set of ethics; both us don't believe in business at any cost.'' Desai should know. He spent much of his college days along with Kampani and Hemendra Kothari, Chairman, DSP Merrill Lynch, (Kothari and Nimesh are of the same age whilst Desai is a year older), and all three of them played cricket for Sydenham College in the sixties. Both Kothari and Kampani come from stockbroking families and began exploring similar capital market-oriented opportunities simultaneously. The difference? Kothari pursued a global alliance with Merrill way back in the eighties. The joint venture was formalised a decade later. Kampani on the other hand had an alliance with CSFB, but the joint venture with Morgan Stanley happened only in 1998. That's why industry observers point out that DSP Merrill Lynch by virtue of being partners for longer have been able to build a strong second line, with deal-makers like Amit Chandra and Rajeev Gupta sniffing and closing out transactions on their own. Says Wadhwa of Ambit : ''The difference between JM Morgan Stanley and DSP Merrill Lynch could be that Kothari has spent time building an institution whilst Nimesh has built business and relationships.'' Krishnamurthy hastens to dispel the myth. ''When JM, which was the best investment bank in India, and Morgan Stanley, which is the best in the world, got together, they proved that one plus one is greater than two.'' Of course, it would be silly to believe that JM Morgan's investment banking business begins and ends with Kampani. He's got a solid team backing him; you don't hear too much about them because, like their chairman, most of them stay away from the arc lights.
The Deal-maker's A-Team ''His status may make our investment banking firm appear a one-man army, but it would be a fallacy to assume that. There is a team, which is driven by Nimesh,'' explains Mihir 'Mickey' Doshi, CEO, JM Morgan Stanley Securities. There's Dipti Neelakantan, Senior Vice President in charge of the client-servicing group, who's been with Kampani for 20 years now and who played a key role in introducing the concept of book-building in public issues to SEBI, and eventually to the Indian markets. Another old JM hand is V.K. Bansal, ed in charge of corporate finance, who's closed many a deal on his own. Like the ICICI-ICICI Bank merger with ''Nimesh coming in only at the final presentation." Five VPs and senior VPs ensure that the ideas keep flowing. They head five broad industry groups. So, for instance, the idea of bringing L&T and Grasim together was generated by the cement group. And the research into the cost advantages and the economies of scale that BPL, Birla-AT&T and Tata Cellular could reap if they merged was courtesy the telecom group. ''The firm has been institutionalised,'' explains Premal Parekh, Executive Director, who is in charge of M&A, and who came on board after the JV was formed. Of 60-strong investment banking team, close to 60 per cent would be JM hands and the rest hitched on after JM Morgan Stanley was formed. In the capital, JM Morgan Stanley has another of its ace hard-hitters, Vice Chairman Naina Lal Kidwai, who handles most of the privatisation mandates, MNC clients and new-age businesses like Wipro and Bharti Tele-Ventures. Even as the JM Morgan team goes about acquiring new clients and building expertise in industry, products and research, Kampani isn't resting on his old relationships. You won't see him too frequently on the cocktail circuit, but he networks in his own, discreet way. Nine months before the bpl-Birla at&t-Tata merger was announced (in June 2001), Kampani met Rajeev Chandrasekhar, CEO, BPL Communications, for the first time. He was introduced to Chandrasekhar by Deepak Parekh. Kampani took it from there. Chandrasekhar was keen to take BPL public, as he needed capital in this funds-guzzling business. CSFB and Salomon Smith Barney were given the mandates, but the market sentiment was weak, and going public in 2001 would have proved disastrous. At a subsequent meeting with Chandrasekhar, Kampani told him that perhaps he should consider consolidating his operations (BPL had the Mumbai, Tamil Nadu, and Kerala circles) via ''a merger of equals''. The BPL scion handed him the mandate. Kampani didn't know it then, but Chandrasekhar was also wooing Bharti and Hutchison. It took Kampani some time (almost a month) to get the three head honchos together, and after the first meeting at the Birla's Industry House, negotiations and valuation exercises went on for four months. Apparently one of the party's immediate solution was to go in for a four-way equal partnership (with Birla, Tata, AT&T and BPL each holding 25 per cent; we can't tell you who's brainwave that was). That idea was duly dustbinned, and finally at a meeting in June 2001 in Bombay House, with Chandrasekhar in one room and Tata and Birla in another, the final numbers were thrashed out, with BPL (and its private equity investors) settling for a 49.32 per cent holding and the Birla-AT&T-Tata combine holding the rest. The deal was signed 48 hours later in the Crystal Room, Taj. It will be some more time before this largest Indian M&A transaction is cut and dried, but Kampani has already got a move on. ''Companies have to manage their businesses, we are only advisors, we do our business,'' he says with a twinkle in his eye, as he readies for another meeting with a prospective client. 1 2 |
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