Ousted from Citi, Vikram Pandit returns to Indian roots

17 May 2013


Vikram PanditFormer Citigroup chief executive Vikram Pandit will spearhead the proposed banking venture of Nimesh Kampani's JM Financial, while also making a strategic investment in the financial services group.

Pandit and his Morgan Stanley colleague and hedge fund partner Hari Aiyar, will together invest nearly $210 million in JM Financial and its two arms, a distressed asset fund and a non-banking financial services firm.

Pandit and Aiyar will also pick up stakes in the bank, if it gets the licence from the Reserve Bank of India, but the quantum of their stake would be as per the central bank's rules.

Finance minister P Chidambaram is a known proponent of expediting banking licences to private companies, in which case J M Financial would be ahead in the queue. However, the RBI favours a more cautious approach.

Pandit said that he believed in the long term growth prospects of India. "I have known Nimesh and JM Financial for over two decades and believe that, given the opportunity, JM Financial can provide the banking and financial services that the country needs," he said.

For the 56-year-old Pandit, who brought back Citigroup from the brink of financial collapse and later saw an unceremonious exit from America's third largest bank, the deal with Kampani marks a comeback into banking.

In a statement to BSE, JM Financial said Pandit and Aiyar, along with Aparna Murthy Aiyar (Hari Aiyar's wife), will pick up a 3 per cent strategic stake in JM Financial through preferential allotment of warrants for about Rs45.4 crore. The duo will invest another $100 million in JM Financial's distressed asset fund for a 50 per cent stake.

Kampani told The Times of India that he has known Pandit for over 15 years. "We go back a long way. He knows this sector and the international market very well. We can now bring capital from abroad and help the group grow further," he said.

JM will nominate Pandit as the non-executive chairman of the proposed bank. As an immediate step, Pandit will be the non-executive chairman of the NBFC arm of the group, and take over the top post at the bank as and when it happens.

In February, RBI eased rules for new banking permits by letting companies with 10-year-track record to apply for licenses and capped foreign ownership at 49 per cent for the first five years.

JM Financial had a joint venture with Morgan Stanley in India until the two parted ways amicably six years back to run independent businesses in the country.

Pandit had spent 22 years in Morgan Stanley, joining as an associate in 1983. In 1994, he became the managing director and head of its institutional securities division, and in 2000, he became the president and chief operating officer of its worldwide operations in the institutional securities and investment banking businesses.

There were about eight overlapping years when JM Financial was associated with Morgan Stanley when Pandit was a senior official of the company.

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