The new tribes of polyglot finance

Indeed, a very pertinent article! The second last paragraph is what a few of us Indian bankers are trying to change. Ofcourse, this will come along with the growth of our own companies and economy and as we gain a leverage and bargaining power in the world markets.
- Parshu

By Gillian Tett

Published: December 8 2006 19:48 | Last updated: December 8 2006 19:48

When derivatives traders collect their bonuses next month, many of the “hurrahs” will be uttered in French. For though Wall Street is popularly viewed as the cradle of high finance, a curious feature of today’s financial world is that derivatives whiz-kids often hail not from the US, but France.

Some of these are found at French banks, such as BNP Paribas or Calyon; others at non-French groups, such as Barclays or JPMorgan. Either way, this Gallic bent highlights a bigger truth that politically correct banks hate to admit: namely that national patterns still exist in today’s financial jungle.

While places such as the City of London are now admirably polyglot, the distribution of these “immigrants” is uneven. “The City is extremely diverse but there are pockets of [national] concentration, particularly in sales,” says Avinash Persaud, a seasoned City observer.

Take the French. They have become prominent in complex finance, it is whispered, because numeracy is highly respected within French culture. “France has a very good educational system for producing derivatives traders,” notes Shaun Wainstein, London head of equity derivatives at BNP Paribas.

A love of abstract reasoning also helps with research skills: officials at Fitch credit rating agency, for example, have noticed a high proportion of French analysts in their London ranks. Russians are also over-represented in complex finance, perhaps reflecting a cultural emphasis on numeracy. Greeks punch above their weight in derivatives, too. India is another fertile source of whiz-kids. Indeed, some US banks now hire more graduates from the subcontinent than from Harvard.

Germans, however, are notably under-represented in complex finance. For while their education system produces brilliant scientists, these rarely want to leave academia or industry. British culture, by contrast, might have less respect for numeracy – but those eggheads who do emerge often head for the City. It is also relatively rare to see an Irish derivatives trader, though the Irish are plentiful in sales roles, which require charm. Spanish, Italians, British and French also appear whenever interpersonal skills matter, such as in advisory work.

Anglo-Saxons, meanwhile, arguably appear in most categories. But the place where Americans (and, to a lesser extent, the British) are notably over-represented is the upper echelons of investment banks, which remain dominated by white, male faces, in spite of the banks’ “diversity” rhetoric.

Of course, for every stereotype, exceptions abound. Just look at Anshu Jain, the high profile (Indian) head of investment banking at Deutsche Bank. Nevertheless, even with a meritocracy – or perhaps because of it – national patterns are likely to stay, as long as educational differences abound. Vive la différence, as the French derivatives traders might say.


The writer is the FT’s capital markets editor

Copyright The Financial Times Limited 2006

India-Arab CEOs summit to explore biz alliances

- Economic Times December 05, 2006

NEW DELHI: About 100 Indian CEOs will be in Dubai Thursday to explore business alliances and strategies with their counterparts from the Arab world at a day-long summit.
The first India-Arab World CEO Summit, being organised by the United Arab Emirates (UAE) ministry of economy, will provide an opportunity for CEOs "to flirt with various proposals for better collaboration to boost two-way flow of investments", said Khalid Al Malik of Tatweer, a subsidiary of Dubai Holding.

Dubai Holding is a semi-government owned company with seven entities each with several subsidiaries. Among the major projects handled by the company are Dubai's Internet City and Media City.

Representatives from 22 countries from the Arab world would be taking part in the summit, which is slated to become an annual event.

"As India charts the roadmap for higher economic growth, infrastructure investment remains a major goal, while we in the Arab World are looking for investment opportunities particularly in technology.

"In the era of globalisation, the summit will help CEOs to explore how we can mutually benefit," Al Malik, who is also CEO of Moutamarat, a conference organising subsidiary of Dubai Holding, said.

Promoted by UAE Minister of Economy Sheikha Lubna bint Khalid Al Qassimi, the event is being managed by Moutamarat with the Confederation of Indian Industry (CII) as partner.

"The knowledge-based event will provide a platform for exploring opportunities and networking, and help explore strengths of different countries. We see lot of opportunities in India and this platform will help us build bridges between India and the Arab World," said Al Malik.

"Part of the Arab world's efforts to strengthen ties with Brazil, Russia, India and China or the BRIC initiative, the initiative aims for closer cooperation with the four economies as part of the globalisation strategy," he said.

India would be hosting the second summit in 2007. Moutamarat is exploring possibilities of holding a similar exercise with Chinese CEOs next year. This would be followed up with meetings with Brazilian and Russian CEOs, possibly in 2008.

Based on a knowledge report by global consultants Mckinsey and Ernst & Young, Al Malik said the plan was to have at least two CEO summits every year. The platform is also expected to help CEOs to voice views on investment hurdles and get speedy redressal.

US listing loses some of its value

Investors are paying sharply lower premiums for shares of foreign companies listed in the US, following a 2002 crackdown on corporate malfeasance, according to new academic research.

The findings are expected to be cited in a report due to be released by the Committee on Capital Markets Regulation, a private sector group studing the impact of regulation on the competitiveness of US financial markets, an issue new US Treasury Secretary Henry Paulson has emphasized.

Foreign companies whose shares are listed both in their home market and on a US stock exchange traditionally trade at a higer vlauation relative to book value, or the accounting value of its assets, than domestic peers that aren't cross-listed. That premium might result from the greater trust investors place in a company that has met US listing standards, or the deeper market for its shares a US listing brings.

The premium for listing in the US in addition to the home stockk market has dropeed sharply since 2002, according to Luigi Zingales, a finance professor at the University of Chicago's graduate business school and a member of the capitla markets committee.

He measured the advantages of listing in the US by tracking the difference between market value - the price at which a company's stock is trading - and book value. If a cross-listed company traded at 150% of book value, and a similar company from the same country that was listed only on a home market traded at 120% of book vlaue, the "valuation premium" was 30 percentage points.

The premium averaged 51 percentage points from 1997 to 2001, then dropped to 31 percentage points between 2002 and 2005, he found.

In theory, investors might pay more for shares of a company that meets more stringent rules because of good corporate governance. But Mr. Zingales found the premium fell most sharply for companies from countries with well-regarded corporate governance standards, such as Japan, Hong Kong, Canada and the UK. That implies investors saw more costs than benefits in a US listing after 2002, he said.

By contrast, companies from countries with poor corporate governance, such as Italy and Turkey, saw little change or an increase in the premium for cross-listing. That suggests investors felt the additional benefit of such companies meeting the post-2002 regulations equaled or outweighed the extra cost. Mr. Zingales measures corporate governance quality according to how well minority shareholders are treated relative to controlling shareholders....

- Wall Street Journal Exclusive

Tapping Middle East capital

Many of my entrepreneur friends in India keep asking me for sources of funding from private equity houses and venture capitalists. The large investment houses in the Middle East Gulf could potentially be a very good form of financing for business initiatives in India.

There are many reasons for a successful partnership between the two regions - the Gulf is filled with a lot of expatriate professionals originating from India and several Indians occupy senior positions in the investment houses there. The locals in the Gulf understand the culture very well owing to their long relationship with the subcontinent. The currency of Bahrain, for example, was the Indian rupee till the early 1970s. Indian companies are experiencing great growth momentums and this could provide great returns for these investment houses. Indian companies can have access to a relatively cheap source of capital from a neighbouring region.

More than talking about the merits and demerits, I would like this to be a source of information for Indian companies about the Gulf region. Below is a list of some of the biggest funds in the region. Please contact me if you need additional information


Funds:
Al Madina for Non Listed Companies Fund
Technology Venture Fund
New Enterprise Fund
MENA Real Estate Development Fund
Abraaj North Africa Fund
Infrastructure and Growth Capital Fund
Fortune Management PE Funds
Barada Investment I
Boubyan International Real Estate Fund
Al Masdar Renewable Energy Fund
Injaz Mena Private Equity Funds
DIB / DWP Family of Funds
Al Tawfeek Private Equity Fund
India Fund
GCC Infrastructure Fund
EFG-Hermes Oil & Gas Fund
The Carlyle Group MENA Fund
EMP ENergy Fund
Fortis - Fransabank PE Fund
IT Ventures II
NCB Private Equity Fund
KPC Renewable Energy Fund (NET)
Evolvance Private Equity GCC Fund
Evolvance Educational Fund
Byblos Private Equity Fund
MENA Infrastructure Fund
NBK Capital Equity Partners
DIB-DPW Telecom, Media, & Technology Fund
DIB-DPW Global Energy Fund
Delta Capital MENA Telecom Fund
Euro-Mediterranean Fund (ALTERMED)
Noor Secondary Fund I
Alf Yad 1
Shefa HealthCare Fund E.C.
Ryada Islamic Private Equity Fund / Capital Private Equity Fund
Frontier Opportunities Fund I
Gulf Springs Real Estate Fund
Carnelian I
Growth Gate
Technology Development Fund II
Horus Agri Fund
Catalyst Private Equity
Arab Technology Ventures
Zad Communication and Technology Fund
TNI Private Equity Fund
Levant Capital
Al Rajhi Real Estate Fund
SAGIA ICT Fund
Abraaj-BMA Pakistan Buyout Fund LP
The Pre-IPO Fund
Global Opportunistic Fund II
Technology Development Fund
JD Capital
Ascent Medical Technology Fund II
GCC Energy Fund L.P.
Gulf Capital
Private Equity Fund
Capital Morocco LP
MENA Small and Medium Enterprises (SME) Fund
The Jordan Fund
Horus Private Equity II
Saraya Real Estate Mena Fund
Middle East Real Estate Opportunities Fund II
Middle East Real Estate Opportunities Fund
Markaz Energy Fund
Abraaj Buyout Fund II
GCC Real Estate Fund
AGRAM Fund
Markaz Real Estate Fund
The Markaz / Hamilton Lane Technology Fund
Capital North Africa Venture Fund
Ithmar Fund II
IDB Infrastructure Fund L.P.
HSBC Private Equity Middle East
Maghreb Private Equity Fund II
Abraaj Real Estate Fund
MENA Capital Private Equity Fund I
SHUAA Partners Fund I, L.P.
Kuwait Private Equity Opportunities Fund
Swicorp Joussour Fund
Amwal Al Khaleej Commercial Investment Company
Accelerator Technology Fund
Intaj Capital
Swicorp Emerge Invest
AlArabi PE Fund
Intel Capital Middle East and Turkey Fund
EuroMena Fund
The Buildings by Daman
Lebanon Real Estate Development Fund, L.P.
Athar Al Majd Diversified Private Equity Fund I
National Technology Enterprises Company NTEC
Aqar Management I
IT Ventures
KFH Venture Capital Fund
MENA Water Ventures
Eagle One Real Estate Investment Company (Holding)
Tuninvest Innovation
Jordan Hi-Tech Venture Fund
Injazat Technology Fund
Ithmar Fund I
Capital Morocco Fund
MENA Direct Investment Fund
Buyout Fund I
Middle East Technology Fund (METF)
IT Concord-Mist Technology Venture Capital Fund Limited
Egyptian Direct Investment Fund Limited
Tuninvest Magreb PE Fund
Tuninvest International Ltd
Tuninvest International SICAR
Tuninvest Tunisie SICAR
Commercial Int'l Investment Company
Tuninvest
Daman Iraqi Opportunities Fund
Minah Ventures
Horus Private Equity Fund
Estithmaar Ventures TMT Fund, LP
LI Venture Holding SAL