Anshu Jain: the Bono of investment banking

IFR 2165 7 January to 13 January 2017
6 min read

“THE GREATEST MANAGER of any sales and trading organisation in the world … like Bono joining your rock band” was how Cantor Fitzgerald Chairman and CEO Howard Lutnick gushingly described his close friend Anshu Jain joining his racy broker-cum-investment bank as president.

I’m sure Jain never imagined that sort of comparison but I’m equally sure he loved it.

It’s an intriguing appointment by any stretch and one that no-one could ever easily have predicted, particularly given it’s not the kind of industry-leading role one might have expected of Jain.

On a personal level, as much as Jain and Lutnick might be friends, putting two testosterone-fuelled larger-than-life control-oriented alpha males together in one room, even if nominally as partners, is likely to be a fascinating spectacle.

It has a touch of the gladiatorial combat about it, to the extent that if you were to read one day in the tabloids that one had done away with the other in a bid for ultimate supremacy there’d be a touch of ‘I told you so’ about it.

Then again, Lutnick stresses their friendship and talks of the two of them having fun developing a new way of doing business. This, he also says, is no succession-driven appointment.

It’s still a bit “Back to the Future”, though. It’s as if in hiring Jain, Lutnick is seeking to rebuild the aggressive sales and trading-driven investment banks of yesteryear.

He speaks not of competing with the investment banks, but of banks being overloaded by capital and regulatory burdens that undermine their ability to extend risk to clients. The inference there sounds almost dangerous in today’s climate, but the opportunity to take up the baton the banks have been forced to drop sounds like a challenge he relishes.

HAVING SAID JAIN’S move was hard to predict, what was less hard to predict was that he would end up in the shadow banking arena.

You just couldn’t see him sticking it in the banking industry; not just because of the lack of CEO vacancies but because the way the industry is regulated and supervised just isn’t for people with the backgrounds and inclinations of people like Jain.

Cantor and its various offshoots have an aggressive business orientation that will appeal to Jain’s animal instincts. Cantor is no minnow: the group employs over 10,000 people across financial services (rates, FX, credit, energy/commodities, equities, capital markets and investment banking) and real estate. That’s bigger than Deutsche Bank’s corporate banking and securities division.

In Q3 2016, subsidiary BGC posted revenues of US$643.5m and made pre-tax profits of US$107m. Beyond the numbers, Cantor has been serially acquisitive, buying London insurance broker Besso Insurance last week, following 2016 takeovers of London equity derivatives broker Sunrise Brokers, Continental Realty in the US, Micromega Securities in South Africa and Perimeter Markets in Canada.

“Anshu has a proven track record as a pioneer and builder of leading global businesses. We expect to leverage Anshu’s global outlook, unrivalled experience, and deep network to further grow our firm,” the press release announcing the hire said. Jain spoke of setting course for the next era of the firm’s growth.

It sounds like the two have hatched a plan. Building out the international platform is likely to be an early priority; Lutnick has already mentioned growing the investment bank in Europe as an area of focus. If that means growing headcount and continuing with the Back to the Future theme, I took to wondering if the Cantor expansion plan might involve putting the legendary Deutsche Bank band back together to capture sales and trading flow from the shadows.

SO I CHECKED to see what Jain’s peers and lieutenants, those who were there during the DB glory years, are up to and whether they’d be available for selection. In truth, the answer is probably not as they’ve all moved onwards and upwards – arguably to positions optically more attractive and with more potential upside than that of their former leader.

Jain’s former credit wing man Rajeev Misra, who passed through UBS and Fortress after leaving Deutsche Bank, is certainly the man of the moment today.

He’s at the helm of Softbank’s US$100bn Vision Fund, the legendary tech fund that is near to reaching its close. As well as putting US$28bn of its own money into its venture, Softbank has garnered US$45bn of backing from Saudi Arabia’s sovereign wealth fund, as well as tonky cheques from Apple, Oracle founder Larry Ellison’s family office, and others.

Jain’s former head of equities and equity derivatives Yassine Bouhara, who also passed through UBS after leaving DB, is chairman of his own firm, Tell Group, which is an investment bank-cum-hedge-fund-cum-private-equity-firm focusing on Mediterranean Europe, North Africa and the Middle East (MENAME) including his native Algeria. The team, now over 50-strong, is spread through offices in Algiers, Dubai, Zurich, Monaco, Paris and Luxembourg.

Michele Faissola, Jain’s former rates and commodities man, is the ‘F’ in the Thunderbirds-sounding F.A.B Partners, which he set up with former DB men Nizar al-Bassam and Dalinc Ariburnu. It’s described as an investment platform backed by a global network of financial and strategic investors. In August, the firm acquired the US$14bn private debt and CLO manager CIFC for US$333m with backing from the Qatari royal family.

And Kevin Parker, who ran equity derivatives, equities and asset management, is managing partner of Sustainable Insight Capital Management and also owns Chateau Maris Cru, the organic biodynamic winery in France whose buildings are made out of … hemp … yes really!

Keith Mullin