South Mumbai no more investment bank capital as big guns move out

For decades, it was the hallowed launch pad of multi-billion dollar deals brokered by the high and mighty investment banks (I-banks), propelling India into the global mergers and acquisitions (M&A) sphere.

But now, south Mumbai or SoBo seems to have lost its hall of fame status in the industry.

Several top-notch I-banks have downed the shutters for good at their SoBo headquarters and moved into new digs in central and northern parts of the city.

Two of India's most storied I-banks, JM Financial and Kotak Mahindra Capital, moved out to the central suburbs in recent weeks, capping a steady exit of the pricey deal makers from their one-time hub of rewarding careers.

While some MNC banks such as Citi, Standard Chartered and BNP Paribas have shifted from the expensive financial centre to the relatively lower-cost business district of the Bandra-Kurla Complex (BKC), others like Credit Suisse, Barclays, Morgan Stanley and Goldman Sachs have made Worli, Lower Parel and Prabhadevi their base.

JM Financial relocated to a swanky building in Prabhadevi while Kotak Mahindra Capital shifted to a 10-story tower in BKC. J P Morgan and Edelweiss moved to next-door locations in Kalina.

"The trend is getting stronger. Some choose to buy their own premises, while others take space on lease," said Ramesh Nair, chief operating officer at Jones Lang LaSalle India, a global property consultancy firm.

The flight from SoBo reflects the changing epicentre of the city's expanding business horizons and the emergence of better buildings that boast of superior safety features and infrastructure (transport and connectivity) northwards. This migration has impacted the city's commercial real estate fortunes, with SoBo rentals coming under unprecedented pressure. It's also indicative of a new complexion the Indian deal makers club has acquired in recent years.

I-banks' expansion in India -- and in south Mumbai -- largely ran parallel to economic liberalization in the 1990s. Global biggies tied up with local merger advisory firms to mark their entry. For a long time since then, the M&A league table was dominated by Indian I-banks. This changed over the past decade with foreign firms building independent presence in Asia's third-largest economy.

Many of them embraced newer business districts such as BKC, Lower Parel, Worli, Prabhadevi and Kalina, tracking the real estate boom and tardy progress in infrastructure. "MNC firms wanted larger modern office spaces and better logistics support befitting their profile. Besides, the new providers of capital fuelling the investment action, like private equity funds, were also anchored in the emerging districts," said Sourabh Chattopadhyay, country head of Wellesley Partners, a Hong Kong-based executive search firm focused on financial services.

"While land prices are not relatively low any more in the new locations, areas in the north are better propositions to attract more clients," added Nair of LaSalle.

Bank of America Merrill Lynch, SBI Caps and HSBC are among the few I-banks still left in SoBo, while many others have retained some office space primarily for meetings in the earlier stronghold, where some of India's richest industrialists reside.

"Some of the big deals continue to be struck in south Mumbai, but then locations don't matter any more," said an I-banker who didn't wish to be quoted.