Dawnay Day's global trouble sends shiver down Indian arm

Fri, Jul 18 01:05 AM

The tremors of a global economic turmoil that hit the Indian shores early this year is likely to worsen in the days to come. About four months after the US-based financial services giant Lehman Brothers shut down its mortgage capital division in India, UK-based Dawnay Day International's Indian arm Dawnay Day AV has started feeling the pinch.

According to international media reports, the parent company has run into financial trouble. Financial Times reported on July 14, that firm has put up its investment-banking arm for sale, while Reuters said the company has appointed Ernst and amp;Young to restructure some of its businesses.

Losses from businesses around the world are likely to spill over into the company's Indian arm Dawnay Day AV as well. The buzz is getting louder that Dawnay Day AV, which entered the Indian markets about three years ago in a partnership with the former DSP Merrill Lynch executive Alok Vajpeyi announcing big plans for India, is understood to have initiated the plan for a major organisational restructuring involving a strategic tie-up for its financial services business.

Dawnay Day AV runs securities and analytics businesses along with a few real estate investment funds in India. It employs around 1,600 people across 40 branches.

Dawnay Day AV Financial vice-chairman and managing director Alok Vajpeyi seems to be confident about the company's prospects in India. "These are difficult times for businesses across the spectrum, and we are managing well within the environment," Vajpeyi said in an e-mailed response.

Regarding its plans to rope in a strategic partner for financial services business, he said, "I prefer not to comment on speculations." Financial sector grapevine has it that rival firms are now poaching employees from Dawnay Day.

"We have received several CVs from Dawnay Day. We have recruited some people," said the HR head of a multinational financial services giant.

The sub-prime crisis that broke out in the US last year later snowballed into a global economic crisis that saw several banking and financial services firms go broke. Recently, US witnessed the second biggest closure after Continental Illinois National Bank seized to exist way back in 1984, when IndyMac shut down its business following heavy losses.

The world's largest economy has witnessed five shut downs in the financial services segment so far in the year. With a major share of the population still staying away from equity-related investments, the Indian financial services sector is poised for a rapid growth.

And several large Indian as well as foreign conglomerates are vying for a major pie of it. The sector is witnessing a lot of takeovers also.

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