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February 11, 2014 The Economic Times

Five upcoming investment-banking firms that are going places

I-banking insight:

Succession planning and preparation is very critical for boutique firms as often they are identified with the founding team and their personalities —C Venkat Subramanyam

Murugavel Janakiraman, founder of online-services firm Consim Info, which runs the matchmaking service Bharat Matrimony, can never forget New Year’s Day 2006. His investment banker, Srikanth Narasimhan, director at Veda Corporate Advisors, called to wish but also had some bad news: the pain-staking preparatory work for Consim’s fundraising, which took up a good deal of 2005, had to be done again.

Westbridge Capital had chosen one of Consim’s rivals. Options had run out. Narasimhan, however, convinced Janakiraman to make a pitch to Yahoo, which ended up infusing two rounds of funding. Looking back, Janakiraman is thankful he was dealing with Veda, the boutique I-bank from Chennai. “They are neutral, and ensure a fair deal, even if it takes time,” he says.

GSK Velu, who has set up five healthcare companies, agrees. “When you raise funds, you need someone trustworthy. You share a lot of confidential information with investment bankers, and we found Veda to be reliable,” says Velu, who has worked with Veda four times to raise funds.

Far removed from Mumbai, the financial capital, Veda’s founders knew long before they set shop in 2003 that Chennai had untapped opportunities aplenty, notwithstanding its fascination for debt funding. For, it was the second innings as entrepreneurs for founders C Venkat Subramanyam and M Vinod Kumar. In 1998, they had co-founded Mantra Consultants, subsequently selling it to accounting firm Ernst & Young.

“First-generation entrepreneurship was taking off (in Chennai),” says Subramanyam. “But local firms were more focussed on capital markets and Mumbai firms did not have the patience and perseverance for PE/M&A advisory… we seized on the opportunity.”

Narasimhan joined the duo in 2005. They figured out Chennai needed much more of a boutique set-up than a large one. Veda also figured out that its sweet spot was early- to mid-stage companies.

Veda, Sanskrit for knowledge, has so far enabled 69 deals. While deal sizes range from Rs 50 crore to Rs 1,000 crore, a majority are in the Rs 100-300 crore band. A team of 20 operates in three broad areas: private equity, mergers and acquisitions, and structured finance.

Veda’s main challenge now, Subramanyam says, is “moulding and shaping” new talent. “Succession planning and preparation is very critical for boutique firms as often they are identified with the founding team and their personalities,” he says.

The firm has moved into some tier-II and tier-III cities. It has remained largely aligned to corporate advisory services, though it once considered an entry into capital markets. Subramanyam says Veda has also received buyout proposals from other I-banks. “It is nice to be courted and wooed, but right now we are in no mood for a wedlock!” It would rather continue with just the matchmaking.