I graduated from IIT in April 2004. Till then the bug of Finance didnt hit the Indian market. I remember majority of students at that point in time wanted to go into consulting firms such as Capital One, Mckinsey, BCG etc. These firms were very selective (and believe they still are) and mostly who got chance for their interview were top performers in their class. I guess majority of the students must not have heard or know very little about financial firms like Goldman Sachs, Lehman etc.
Time changed and I remember in just one year, ie 2005, students started getting hired by GS, Lehman, MS etc from IIT Bombay campus. I believe Lehman hired close to 25 students in 2005. Career prospective changed and because of the high paying nature, financial institutions probably became the first class choice of the elites (and non elites :P ).
During 2004 till late 2008, it was a boom boom time for financial engineering. Funds in India grew at a fast pace. Private Equity became a new buzz word and everybody from investment banking to consultants dreamt of going into Private Equity some day. And why not, the way the PEs were reaping benefits through financial engineering was unprecedented. People who knew very little about businesses (referring to everybody minus the upper management) were building financial models and trying to justify that a particular investment makes sense via financial engineering. And the benefits per deal for these folks were first class. Investment banking also enjoyed a boom by being a middlemen and offering deals after deals to these private equities and industry players.
Time changed in 2008 and the world witnessed another (yet again) financial crisis, which is still not over. Investors became more and more cautious and deal closing started to become more difficult. Moreover, valuations have become so high that every other deal to many PE players just look too high to get involved in. Further, the investments done prior to the crisis are not reaping any profits post-crisis, which means that exit is difficult. No exit simply means no profit for the investor, which means less money for the next round of investment for private equity funds. This leaves no option for many funds but work hard to improve the financial sheets of their portfolio companies through structural or value engineering. Excellent article by economic times few days back on the state of PE in India. They need to dirty their hand and bring real value in the company by making things work, by asking correct questions (and not just talking about balance sheet) while being as a board of director. This trend is pretty much visible now that PE are looking to hire more industries folks. This had to happen some day. I believe the new trend, within the working class and not graduating students, will be join to industry for next 5-10 years.
Time changed and I remember in just one year, ie 2005, students started getting hired by GS, Lehman, MS etc from IIT Bombay campus. I believe Lehman hired close to 25 students in 2005. Career prospective changed and because of the high paying nature, financial institutions probably became the first class choice of the elites (and non elites :P ).
During 2004 till late 2008, it was a boom boom time for financial engineering. Funds in India grew at a fast pace. Private Equity became a new buzz word and everybody from investment banking to consultants dreamt of going into Private Equity some day. And why not, the way the PEs were reaping benefits through financial engineering was unprecedented. People who knew very little about businesses (referring to everybody minus the upper management) were building financial models and trying to justify that a particular investment makes sense via financial engineering. And the benefits per deal for these folks were first class. Investment banking also enjoyed a boom by being a middlemen and offering deals after deals to these private equities and industry players.
Time changed in 2008 and the world witnessed another (yet again) financial crisis, which is still not over. Investors became more and more cautious and deal closing started to become more difficult. Moreover, valuations have become so high that every other deal to many PE players just look too high to get involved in. Further, the investments done prior to the crisis are not reaping any profits post-crisis, which means that exit is difficult. No exit simply means no profit for the investor, which means less money for the next round of investment for private equity funds. This leaves no option for many funds but work hard to improve the financial sheets of their portfolio companies through structural or value engineering. Excellent article by economic times few days back on the state of PE in India. They need to dirty their hand and bring real value in the company by making things work, by asking correct questions (and not just talking about balance sheet) while being as a board of director. This trend is pretty much visible now that PE are looking to hire more industries folks. This had to happen some day. I believe the new trend, within the working class and not graduating students, will be join to industry for next 5-10 years.
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