Pandit: Stage set

Mumbai, May 16: Vikram Pandit, the former chief of Citigroup, is entering the financial services sector in India.

Pandit is making a strategic investment in JM Financial and is expected to play a key role in helping the firm win one of the several banking licences that the Reserve Bank will issue next year.

Pandit, who was the CEO of Citigroup from December 2007 till he was ousted dramatically last October, will don multiple roles at the JM group, which is owned by the Kampanis.

He will make additional investments in the non-banking finance company (NBFC) of JM Financial, its proposed bank and a joint distressed fund.

To begin with, Pandit will make a strategic investment in JM Financial by subscribing to warrants. The company will issue a little over 1.16 crore warrants for a consideration of nearly Rs 23 crore.

JM Financial will also issue warrants to Hari Aiyar who was closely associated with Pandit in running the hedge fund Old Lane that he had formed with John Havens after leaving Morgan Stanley. Old Lane was acquired by Citigroup for $800 million when Pandit joined its top leadership team.

A little over 58 lakh warrants will be issued to Aiyar and the same number to Aparna Murthy Aiyar, JM Financial told the stock exchanges today. The company will raise over Rs 45 crore from the issue of warrants to these three individuals.

More importantly, JM Financial said it would apply for a banking licence. Pandit would be nominated as the non-executive chairman of the proposed bank. JM Financial added both Pandit and Aiyar would have the right to purchase shares up to the amount prescribed by the RBI in the bank.

JM Financial plans to expand its lending and finance business by issuing $100 million capital to funds raised and managed by a firm led by Pandit. The former Citigroup CEO will be nominated as the non-executive chairman of the NBFC. Both JM Financial and Pandit will also form a distressed asset fund with an initial capital of $100 million.

“JM Financial and Vikram Pandit have known and worked with each other for many years since the early days of the growth of financial services in India. We share similar values and are confident that the proposed association will create strong domestic financial services businesses with global best practices and reach. We are very excited to have Vikram as a strategic investor,” JM Financial Group chairman Nimesh Kampani said.