Last week was indeed a surreal week
for the City of London vis-à-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.