Economic Times:
When the promoter of a computer maker wanted to raise Rs 6 crore through an initial public offer, the biggest challenge he faced was not in convincing investors to put their money in his company. The real problem was to convince investment bankers to manage his tiny issue.
He first approached some large investment banks, who only scornfully reacted to his ‘over-enthusiasm’ to go public. He then turned to a brokerage in Hyderabad, which was just entering the merchant banking business. The tiny firm managed the issue and happily for the promoter, the company was listed at a handsome premium.
Times without number, such scenes are playing out in the Indian market for investment banking, where hundreds of small companies are not able to attract the attention of well-established bankers. But as the economy expands and business activity in the small-scale sector intensifies, a growing need is being felt for entrepreneur-driven investment banks, that will help the small guy raise money.
Experts say a viable start-up opportunity lies in focused, small-ticket investment banking that will not seek to compete with the big boys, but tap an under-served niche as an entry ticket to the business. Read more.
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