JM Financial's Rajeev Chitrabhanu: The professional entrepreneur

Clients see us as trusted advisors, shareholders see us as partners and employees see us as family,” reads a guiding principle pasted on one of the walls of the JM Financial group, a listed entity founded by master dealmaker Nimesh Kampani in the early 1970s. “I personally spend a lot of time formulating these,” says Rajeev Chitrabhanu, as he strides across the floor, iPad in hand, at his office in a skyrise in Mumbai’s Prabhadevi.

A maze of corridors leads to a conference room called ‘Chicago’, where Chitrabhanu settles down. “I grew up in Chicago,” smiles the 45-year-old. As managing director and CEO of JM Financial Services and CEO of JM Financial Capital—both subsidiaries of the JM Financial group—Chitrabhanu manages the investment advisory, institutional securities and lending against securities and property businesses. This includes equity brokerage, wealth management, distribution, sales trading, research as well as the capital markets group.

Chitrabhanu’s journey, however, isn’t as simple as it sounds; it’s been one of experiment and adventure. He dabbled in different trades before joining JM Financial (what was then JM Morgan Stanley) 18 years ago as an investment banker. Swiftly, he rose up the ranks. And much like an ‘intrapreneur’, or ‘professional entrepreneur’—terms used to describe entrepreneurial individuals who drive growth within big companies —Chitrabhanu built out businesses within the group that today contribute significantly to overall growth.

After spending his formative years in the US, Chitrabhanu earned his graduate and undergraduate degrees from Mumbai University, where early morning lectures afforded him the option of working alongside. He interned at a family friend’s business for a year, trading in soya and other agricultural commodities; then jumped into retail, working at Pepe Jeans in Ireland during a summer vacation. He briefly worked in the diamond trade too. “I always had an interest in business and the creation of enterprises,” he says, “but was in search of what I wanted to do.” On graduating, Chitrabhanu worked with another family friend’s business, this time an Ahmedabad-based listed enterprise that manufactured electrical capacitors. As luck would have it, the company went on an acquisition spree, prompting Chitrabhanu to intern with Mumbai-based brokerage firm Prabhudas Lilladher to understand how to value companies and make sense of the acquisitions his employer was making. That six-month internship helped him realise his affinity for equities, he says.

Six months stretched to five years with Chitrabhanu quickly proving his mettle and eventually heading Prabhudas Lilladher’s foreign institutional investor (FII) business. That’s when he came in close contact with emerging markets investor Mark Mobius, who Chitrabhanu counts as a “huge influence”. Mobius convinced him that he had a long-term career in investment banking, so when an opportunity to work at JM Morgan Stanley—a joint venture between Kampani’s JM Financial and the American firm set up in the late 1990s and dissolved in 2007—came up, Chitrabhanu grabbed it. He joined as a senior associate, helped set up the capital markets group and led mega initial public offerings like that of Citigroup affiliate IT company i-flex Solutions, drug maker Cadila Healthcare and telecom major Bharti Tele-Ventures. “Rajeev was very receptive to learning and worked closely with the leadership team during his initial days. That helped him understand the core values of the group,” recalls Kampani, who retired from day-to-day operations last year, but continues to serve as the chairman of the group.

After four years of earning his spurs in investment banking, Chitrabhanu decided to take a sabbatical and spend time with his parents, who were still in the US. Before leaving in 2002, he put together a strategy paper, looking at three areas afresh—investment banking, wealth and retail brokerage as well as fixed income—where the group could work towards building a leadership position.

However, shortly into his sabbatical, Subodh Shinkar, who closely worked with Chitrabhanu on the strategy paper, convinced him to return. The CEO of the group’s investment advisory and distribution business had put in his papers and the company needed someone to replace him. It was an area that Chitrabhanu and team had outlined within the strategy paper as one that could be further developed to take advantage of the synergies it had with the group’s core investment banking business. “Rajeev has a fantastic background in equities, and is excellent in business strategy. Looking at his strengths as well as this business, we felt he should be there,” says Shinkar, 49, who now works closely with Chitrabhanu as chief operating officer of JM Financial Services.

Chitrabhanu returned on the condition that he would run the business until a replacement was found. But the opportunities he saw on his return drew him in. It was late 2002, the effects of the dotcom crash had settled and the equity markets looked set to grow. Investment patterns were also changing. Retail investors, who had traditionally focussed on fixed deposits, were beginning to look at other avenues. Moreover, JM Financial was a top capital markets franchise. “We had several large corporate relations and understood intrinsic value best. I saw it a natural progression for us to expand to manage their corporate treasury and personal wealth,” says Chitrabhanu. But what was most exciting for him was the operating freedom Kampani granted him. “That unleashing of the ability to drive decisions and strategy, and be entrepreneurial was the best part. Nimesh bhai has been a huge support,” he says.

And, so, Chitrabhanu went about building the investment advisory, wealth management and brokerage business for clients. Soon after, he realised that lending was complementary to what they were doing. “We thought when we give investment advice, why not back it up with lending, so that our clients can take better advantage of the markets?” says Shinkar. Chitrabhanu travelled overseas, spent time with various banks, including Morgan Stanley, to understand the various models in play, and finally proposed the setting up of a non-banking financial company (NBFC) to the board of JM Financial. After getting the green signal, Chitrabhanu and his team proceeded to set up what was one of the first capital markets NBFCs, focusing on IPO financing, margin financing, promoter financing and later extending to lending against all securities.



Today, the group’s wealth management arm has Rs23,664 crore worth of assets under management, up from Rs17,550 crore in FY13, while average daily turnover in the securities business stood at Rs3,464 crore in the fourth quarter of the last fiscal. According to Jiju Vidyadharan, senior director, funds and fixed income at Crisil Research, while the wealth management industry is “expected to do well” over the next few years, the business of brokerage has become “commoditised” by intense competition, with players undercutting brokerage fees to retain customers. However, Chitrabhanu points out that the advisory focus that JM Financial has developed, as well as its integrated lending platform are key differentiators. Lending, he says, now forms a core part of the offering for all advisory verticals at JM Financial. Says Vidyadharan, “Their lending business is turning into a stable growth engine. It has become the key revenue and profit driver for JM Financial.” The capital markets and corporate loan book that Chitrabhanu largely oversees more than doubled to Rs3,237 crore in FY17, over the previous year. Net non-performing assets (NPAs) were almost nil, due to a strong focus on risk management, points out Vidyadharan. Kampani, for his part, believes that Chitrabhanu’s “innate ability to foresee emerging trends and align the business plan accordingly,” distinguishes him as a leader.

Today, JM Financial Services and the lending business connected to it generates revenues of about Rs650 crore for the group, up from the roughly Rs7-8 crore before Chitrabhanu took over, says Shinkar. (Figures for the other businesses that Chitrabhanu runs within the group aren’t publicly disclosed.) Their success is reflected in the many awards the subsidiary has picked up over the years, including the UTI-CNBC TV-18 Best National Financial Advisor Award (Institutional) in 2012, 2014, 2015 and 2016. They were also ranked second among private banks in India, as voted by high networth individuals with over $25 million in assets under management, in Asiamoney’s Banking Poll 2016.  

Most special for Chitrabhanu, however, are the multiple awards JM Financial Services has earned from the Great Place To Work Institute over the years. For all the fashionable talk of empowering employees, Chitrabhanu points out that their culture of actually doing so is reflected in the decade-long tenures of the team’s key people. The group’s guiding principles we walked past aren’t merely words on a wall, but values that are deeply rooted within the organisation, he says. “After you put together a strategy, the success of that strategy depends on your ability to execute. And your ability to execute depends on whether your team stays with you for a long period,” he says. “I’m very proud of our team.”

Unlocking value
Cleverly, Chitrabhanu pulls together his varied experiences – that of working across multiple businesses in his formative years, his time spent in investment banking as well as his deep understanding of capital markets - to help companies drive growth. “What is the right strategy to unlock value and what is the right capital structure to support that? These are two very important aspects,” he says. Take the case of luggage maker Safari Industries. When the opportunity to buy out the company from the founding family came up, Chitrabhanu pushed Sudhir Jatia, a former VIP Industries veteran and now managing director of Safari, to take the lead. Through an open offer facilitated by JM Financial in 2011, Jatia acquired a majority stake in the company. Today, Safari’s market cap, at around Rs600 crore, is more than 15 times as that before Jatia took over. “Rajeev has been a great sounding board. He’s helped us with branding, strategy and most recently, on how to build up our ecommerce business,” says Jatia. He recalls a time last year when he was debating whether Safari should raise additional funds. Chitrabhanu’s sense was that the interest rates were set to go down and advised Jatia to take on additional debt, rather than equity. “His overall understanding of the markets, and his ability to foresee trends sets him apart,” says Jatia.

Similarly, Chitrabhanu has helped Akshay Bector, who runs sauce, condiments and snack-maker Cremica Food Industries, think through various strategic initiatives to support overall growth. Says Ajay Piramal, chairman of the health care-to-financial services conglomerate Piramal group, who often seeks Chitrabhanu’s advice: “Rajeev’s understanding of business, finance and markets helps him find innovative solutions for clients.”

Aside from advising large and small corporates in his official role, Chitrabhanu spends his free time over weekends advising startups on strategy and finance. He’s independently invested in a handful of startups, including mobile gaming company Nazara Technologies, eyewear retailer Lenskart, online home design startup Livspace, parcel delivery locker service QikPod and diabetes management company Beato, among others.

This association with startups, Chitrabhanu says, has a “rub-off effect” on his day job. “A lot of my ideas, my energy, come from these entrepreneurs. They think differently. The world is rapidly changing and interacting with them helps me look at my work with a fresh perspective,” he explains.

As with other industries, technology is set to disrupt the financial services industry too. While Chitrabhanu is sceptical about “robo advisers” —digital platforms that gauge an investor’s risk tolerance and use algorithms to provide low-cost investment advice, he believes that the technologies that underpin them can be leveraged to better serve clients. Data analytics, for example, can be drawn on to deliver tailored and timely information to clients about the markets they operate in.

Despite the businesses he’s built, the value he’s created and the success he’s seen, Chitrabhanu remains nimble-footed. “You could be really successful, but if you take your eye off the ball, you’ll lose out,” he says. The sports analogy comes easy to him—he plays football on the weekends. “You have to keep your eye on the ball.”