Channel: Editor's View Point

  • Surreal week for the City of London

    Last week was indeed a surreal week for the City of London vis--vis its relations with India and Indian corporates.

    By Sanmit Ahuja On 30 November, 2010

Last week was indeed a surreal week for the City of London vis--vis its relations with India and Indian corporates. For those who don’t know, a reference made to “The City” when in London means the Financial Services district and/or industry.
 
Early in the week a major delegation led by the Indian Finance Secretary and one that comprised of numerous senior civil servants and industry leaders presented investment opportunities in the Indian infrastructure sectors to the UK investors.
 
Later in the week Bombay Stock Exchange accompanied by a number of financial services advisors were in town to tell UK corporates that the Indian markets are deep and liquid enough for them to consider fund raising from the country.
 
For the last few years, the global business community has been talking of a multi-polar global epicenter. But the general perception is still that the London and New York will remain global financial centres where the world reaches out to when in need of capital. This may still be the case for the developed nation markets, but a fund raising of USD 500mn by Standard Chartered from the Indian markets using Indian Depository Receipts proved that the bastions of finance may no longer be remain in pole position. A new world order is about to be ushered in much sooner than the world is ready for. Companies in the west (and the east) will now be able to raise capital from the Indian markets.
 
Within India, it is now well published that the country needs to invest USD 1.7 trillion in the next decade to sustain its growth rates. Every time we look at it this figure goes up by USD 300-400bn. Every single person in the “City” is rather keen on participating in this growth. The investors want a piece of the action, the consultants want to be able to offer the best advice to the country’s dynamic enterprises that are constructing this infrastructure. But barring a few pockets, the mood wasn’t celebratory in the City corridors. Professional services firms such as lawyers are either refrained from practicing in India or others in the advisory community are being priced out of the market. UK based banks have receded from the project finance market in India due to their own woes and very few private equity players are currently on the ground.
 
Success does not come easily in India. Those who have succeeded have done so on the back of a strategy to be innovative, cost effective and committed to the market. But for the vast majority success remains elusive.
 
The sand is slowly shifting and new paradigms are being formed. I am not saying that the City will erode, far from it. But the other centres such as Mumbai will fast catch up and create a whole new market for themselves where the current proponents of the City will be left standing as mere spectators.
 
It is time for the City to start changing its modus operandi if it needs to share the piece of this new pie being created in the east.
 

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