Khanna joined DSP Merrill Lynch in July as managing director. At the time, he shared the responsibility of heading investment banking with Amit Chandra, the highly regarded DSP Merrill Lynch veteran. Khanna reported to the newly appointed vice chairman of DSP Merrill Lynch, Patricia McLaughlin, who is based in HK. He was hired as part of MLÆs increased focus on its India operations, pursuant to a hike in stake in the Indian company to 90% in December 2005. It was widely expected that over time distinct portfolios would emerge with Chandra spearheading MLÆs principal activities in India and Khanna handling the client side of the business.
But, as it emerged, both Chandra and Khanna had other plans. Khanna is said to have been toying with the idea of setting up his own business in the area of principal investing since he left Enam Financial Consultants in January this year. At that time, Khanna was open about his long-term plan to turn entrepreneurial, then surprised the market by accepting the ML offer. Sources close to Khanna say he realised shortly after joining ML that this was not what he wanted to be doing in the longer term. Further, an unmissable opportunity to join some other entrepreneurs, backed by capital, presented itself. Interestingly, Chandra has also left to head a private equity fund.
Merrill Lynch in India needs to figure out what to do next. Among the investment banks operating in India, DSPML has historically had an enviable franchise with deep relationships and strong execution skills. However, increased competition has resulted in the going getting tough for all players and DSPML is no exception.
Investment bankers suggest Khanna may not have been with the firm long enough for his departure to make any lasting impact. However, it is still the case that succession planning was not an immediate issue when Chandra left as Khanna could take on the whole job. Sources feel McLaughlin could increase her focus on India and even start spending a larger part of the working week onshore. This could provide an interim solution but in the longer term the firm may need to hire someone. Almost every investment bank and private equity firm has their eyes firmly set on India and is seeking to bring on board the best and brightest. It remains to be seen how DSPML fares in its efforts.
Neither ML nor Khanna had any comment.
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