At the CNBC-TV18 India Business Leaders Award, legendary investment banker Nimesh Kampani, Chairman of JM Financial Group, was awarded the Lifetime Achievement Awards.
One of the country's foremost dealmakers, Kampani has served as guide and confidante to industrialists and CEOs, helped resolve bitter corporate battles and his firm has through the decades managed the listing of a number of marquee companies -- including Bharti Airtel and TCS.
He completed the troika of the three stalwart Ks of the Indian investment banking industry, the other two being Uday Kotak and Hemendra Kothari of DSP.
In an interview with CNBC-TV18's Shereen Bhan, he talked about his legacy and how he came to being India Inc's best secret keeper.
Below is the verbatim transcript of Nimesh Kampani’s interview to Shereen Bhan on CNBC-TV18.
Q: Let me take you back to 1973 which is when you actually started. What was the idea that you had back then and what was the ambition when you actually started JM Financial Group?
A: I must give a credit to my cousin Mahendra Kampani. We had lot of discussion and he asked me why I wanted practise as a chartered accountant and why couldn't we do something different? I said let me give it two years and do the broking business and thereafter will decide what to do.
I started the work on January 1, 1972 and my better half got engaged to me on January 25, so I always used to tell her that JM is my first wife, you are my second. She knows that and I must say that she has stood with me like a rock. All through my crises, Aruna has always been with me. She has brought up the children and I have worked tirelessly, continuously.
So, my idea actually fructified in 1973. I did not like the partnership firm status -- unlimited liability. Broking firms were all partnerships in those days. I told my brother that why can’t we form a separate company. We work together but that will be limited liability company. Frankly, we started with portfolio management and issue management. These are the two things we started. And thereafter the rest is history because from the very first year we started making profit and we all invested Rs 5,000 and that is my investment so far.
Q: I hope a lot of people take lessons from the way that you managed your money and the kind of investment that you've done. Let me took you now to the point when you brought Morgan Stanley on board. What was it like at that point in time India was a very different place not just to do business but it was a very different economy. What was it like to bring Morgan Stanley on board?
A: I didn’t bring Morgan Stanley on board. They brought me on board. I never approached them. They came and approached me and that person was Naina Lal Kidwai, CEO of Morgan Stanley India. One day she comes to my office and tells me we have been debating whether we should have a local partnership. Would you be interested? I said without any commitment I am willing to discuss.
However, at that time we had a letter of understanding with Credit Suisse First Boston. So, it was very tricky and we had negotiation for about six to eight months with Morgan Stanley. I went two to three times to US, met John Mack, Vikram Pandit and all those people over there and then finally they decided, yes, this is the right candidate. Then we created a partnership and I think that was an amazing partnership. Morgan Stanley is a great firm and for 10 years from 1997 to 2007, we worked together.
Ultimately, in 2007 they decided to part ways. My friend Hemendra Kothari had already gone (ahead with a split with DSP's partner Merrill-Lynch). Uday Kotak had also split from Goldman Sachs. Our board is asking us that the other two people have 100 percent why are you at a 50-50 partnership? So, finally they decided to walk out. There was no provision in joint venture agreement, but they decided to do that and when the partner does not want to work with you, you can’t force it.
Q: Let me cut to the future because you talked about Vikram Pandit and Vikram Pandit is going to be part of JM's future going forward and there is all kind of speculation on what that future will entail and whether it will entail banking or not. So, I know you are probably going to say that now I should ask these questions to Vishal but I am going to give it a shot and ask you this question about what we should expect in the future?
A: I am still a chairman of the company -- though non-executive -- and 66 percent shareholder.
Q: Then I should be asking this question of you, so, what should we expect in the future?
A: We had did applied earlier. We didn't get the licence from Reserve Bank of India (RBI). Now, the new licence regime has become on-tap. Frankly we haven't decided yet what we want to do but we are going to be in discussion and decide.
Vikram comes in the month of December to India, so, when he comes we will have a detailed discussion and then we will take a call whether we want to apply or too much crowding has taken place in banking. So, we have not made up our minds. We have some strategy in our mind so watch us, next year we will know.
Q: By December there will be clarity?
A: No, December he will come and then we will discuss. It can be yes, it can be no.
Q: Is it 50-50 right now on whether you should go forward?
A: Having applied once, you can always guess.
Q: Let me ask you about how you see things as far as the economy is concerned and today we are dealing with geopolitical tensions that are rising but the strength of the Indian economy is not being questioned, the fundamentals are strong, the macros are looking better, we have got a credit policy coming up on the October 4. As you look at the economy today, what are the high points for you?
A: First of all, the Narendra Modi government has done some wonderful things on policy matters and this will bear fruits in the next three years time because they are just changing policies one by one. They are removing old legislations which are 100 years old. 1,500 legislations they have repealed. They have done [reforms in] insurance, they have done defence, they have also done goods and service tax (GST) now and Swachh Bharat. So, the new policies which the government is thinking about is going to give result over a period of time. Today, the biggest problem which we are facing in the country is non-performing assets of banks.
Q: What is your view on the sort of OFS offerings that the government is looking as far as public sector undertakings is concerned?
A: The government divestment is a right thing to do because government should not be in businesses. The government should worry about how to help the people of this country, they must get something out of that. So, it is no use sitting on those businesses. So, I am glad that you are telling me that the government is going to announce soon some sale of businesses.
But for your information, I will share this today. Once upon a time about five years back, I was acting as a mediator for the Vedanta Group for the Government of India for Bharat Aluminium Company Limited (BALCO) and I had given an offer to the government for a substantial amount for Hindustan Zinc and BALCO. They could have got Rs 12,000-14,000 crore at that point of time by doing the deal.
Why can't they think like that because they are holding 26 percent minority stake in Hindustan Zinc and 49 percent in BALCO. Now what happened: the whole cycle changed, prices have come down. So, valuation again might have gone down.
This is the strategy they should have and I personally believe that government should have a proper advisory services and they should talk to investment bankers on a confidential basis and ask them what to do.
Q: Since you were talking about talking to investment bankers on a confidential basis the legend of Nimesh Kampani is that he is the keeper of secrets and secrets across corporate India you are corporate India's confidante, how do that come to be?
A: A lot of people tell me to write a book.
Q: Will you?
A: I don't know the answer, if I write a book lot of people's secrets will come out.
Q: Will they be very unhappy, deeply disappointed, scared what will the feeling be?
A: Even if I write the book I have to be balanced.
Q: But what was it and why was it that people were okay to share secrets and sometimes you had secrets of competitors as well, you were sort of mediating between warring fractions as well. What was that experience like for you?
A: Listen more, speak less.
Q: That is the mantra, is it?
A: Yes. Always listen. People become impatient don't listen to client. You listen to client more, you will digest it and you will find solutions. Don't start giving your solution before the client speaks. A journalist should do that.
Q: Journalists are always impatient with asking questions, I must admit. But since we are talking about deal street and IPOs and we just had a big listing yesterday as well. What do you make of the IPO pipeline.
A: It is a very good pipeline.
Q: What do you make of the way they have been priced of late?
A: Yesterday was a bad day with the war and other things, geopolitical situation and the market went down. It was a good time to buy that stock because it has gone down. So, investors should pick it up.
Q: And you believe that we are going to continue to see a robust pipeline as far as IPOs are concerned?
A: I think so. Because our firm has also got a robust pipeline.
Q: That is good to hear. Building a culture, transparency, integrity, accountability, these are nice words but it is not easy to build that culture and sustain it over time.
A: My father was a stock broker since 1946 when I was born, my uncle has been stock broker since 1935s and the firm Jamnadas Morarjee and Company or before that, Seth Jamnadas maybe his father or grandfather started the firm in 1862.
What we were taught in the family was this, when you enter the market the first principle they don't want to see [being violated is] that you don't speculate. Because in those days if you do speculation, the whole firm can go down.
Second thing they taught us is the values of the firm and the family. We shouldn't have greed, we should create an organisation or work in the firm which have all these qualities. This has come from the family. My father used to tell me like this that your word is your bond. You are in an outcry system on the ring. That time there was no computerisation.
Q: What was the most disappointing moment [in your career]?
A: I don’t have disappointment in my group. They have done good issues, they have done well. M&A transactions we have done successfully.
Q: So no disappointment at all in over three decades?
A: Whatever we have touched has become gold.
Q: What next in terms of capital market reforms? We have seen a lot of changes that have happened over the years, we have also seen a lot of changes specifically in the last few years with UK Sinha at the helm of affairs. In terms of capital market reforms, what next, what would you like to see?
A: UK Sinha has done a great job because if you look at his last three-four years tenure, he has brought a lot of reforms in the market. All the timing of the issues have also come down substantially. What is required is -- one more thing -- that the innovation cannot be a guideline. Today for everything you have to follow a guideline and if you follow the guideline then innovation doesn’t happen.
Therefore, if there is any new innovation, it should be encouraged and that encouragement should be given to the investment banker and SEBI should take a quick decision of allowing even if it is not in a guideline then maybe form another guideline quickly.
Q: So dynamic regulatory environment is what you are suggesting?
A: Because we have 3 Cs in our country and everybody is afraid of 3Cs -- Central Vigilance Commission (CVC), Central Bureau of Investigation (CBI) and Comptroller and Auditor General (CAG).
Therefore, it is unfortunate in our country that the bureaucrat is not able to respond quickly on that. It is not their fault but if they get blessings from top and say please go ahead and innovate, I think lot more can happen in the capital market.
Q: You have always said that succession planning is one of the most important things that an organisation must put in place and hence you have put forward your succession plan. Today is the day -- in a sense -- when you step away from JM as you turn 70. What is it that you would like to tell Vishal and the team?
A: I must say that I have got a fantastic team. People here -- if you see some of them -- Dipti is a Group Chief Operating Officer, she has been with us more than 30 years. She started as an analyst and now she is in this position. Rajeev Chitrabhanu is running our financial services company, he has been with us over 15 years. Subodh Shinkar is also with us for about 18-20 years. All these people here have all been there with me.
Therefore, that culture gets created and that culture goes down. Whenever a new employee joins our group or when we recruit from IIM-Ahmedabad and other places, I meet them first, I tell them what to do and what not to do. What was told to you about what not to do -- if you do it, you are sacked.
Q: What not to do? Share that list with us.
A: Insiders trading, internal information, sharing with wife and friends, showing off in a party I did this deal and I did that. All those things you cannot do.
Many times, my wife doesn’t know what I am doing. That is the way. We keep that going in our firm because our asset is our people. They come in the lift everyday and they go away in the lift. So tomorrow he may not come, if he doesn’t want to come. You have to nurture them, you have to give them freedom, we should work with them, we should treat them very nicely, humanly.
These are the qualities an organisation should have then only the people are interested in coming to the office and working on that basis. So I think this younger generation is brilliant. These people will do much better than what we have done because they have huge information. They have got an uncle called Google.
In my days, if I wanted to study something, I used to go to library for one hour to find books, two hours, now you get it online, you can get information so fast. So the whole scenario has changed. The younger generation is fantastic.
India is blessed today because our young generation will be about 18-20 percent of the world population and demography is fantastic. So I feel that all our people who are young here will do very well in the firm.
Q: What next? Any personal goals that you have put down on a list that you want to accomplished?
A: What I will do next three-four years, I will mentor them. Whenever they need me, I will be available but I want to step aside so they can move on their own. If they are doing it well, I am very happy. If they are not then I will have to intervene at a board level not at an operating level.
You should retire when everybody is asking you question why you are retiring and not saying why doesn't this guy go. You should choose your time also rightly on that basis.
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