US i-bank Houlihan Lokey buys minority stake in Avista

July 7, 2010, MUMBAI

US-based investment bank Houlihan Lokey has picked up a minority stake in boutique firm Avista Advisory founded by Rajiv Kochhar. The American firm specialises in advisory services in mergers and acquisitions, capital markets, financial restructuring and valuation.

Avista has played the role of an advisor in several mid-sized financing deals in India and has also been advisor to multinationals on their India entry strategy. “With this transition, we are moving from being a boutique investment bank to a mid-market bank,” said Rajiv Kochhar, founder and CEO of Avista Advisory.

Mr Kochhar had founded Avista in the late-90s as the investment bank focused on mid-tier corporates who had growing needs for capital raising, corporate finance advisory and business restructuring. “Given the specialised advisory segment that we are in, we would like to define mid-market as being between $25 million and $500 million against the standard mid-market definition of $50-100 million,” he said.

According to Mr Kochhar, Indian corporates are once again looking at cross-border acquisitions in an area where Houlihan Lokey would be a strategic fit since it is a part of several sell-side transactions in the West.

“A larger percentage of Indians are looking at cross-border acquisition. In the auctions we are involved in, we are seeing more and more Indians among the strategic bidders often coming up with the highest value,” said Kushal B Kapadia, director of Houlihan Lokey. Mr Kapadia will represent the US firm in the joint venture.

The joint venture would focus on M&A, capital raising and financial restructuring. Houlihan Lokey would also be bringing its strengths in valuations

“Capital will be only a part of the investment. We will be bringing our technical capabilities, including industry coverage models and best practices. We will also be training new employees of the joint venture,” said Mr Kapadia.

The partners have, however, not disclosed the shareholding of the joint venture. “Houlihan Lokey’s stake will be in double digits but less than 26% for present” said Mr Kochhar.

The joint venture will soon be recruiting investment bankers at the director and vice-president level. “We plan to increase the number of our employees from 25 to around 35, which should be good enough for the next year after which we will look at a larger sized team,” said Mr Kochhar.

Going ahead, Houlihan Lokey is looking at recruiting talent from Indian campuses and also increasing its engagement with India. The firm has been an advisor in some of the largest bankruptcy deals in the US, including advising General Motors on the Chapter 11 asset sale to US treasury and on the Lehman Brothers restructuring.