The Relevance Of Investment Banking To The IT Industry
Ever wonder why the Pakistani IT industry did not grow in the past 25 years as much as it should have?
India grew. Malaysia grew with their Multi-Media Super Corridor. Dubai grew with the Internet City. Mexico comes in at No. 4 in offshore IT destinations in the world. Thailand, Indonesia, Philippines, Bulgaria, Egypt, Brazil, the list goes on and we are at Number 25 on that list.
A country like Pakistan with the most amazing talent pool, universities overflowing with IT graduates, extremely low intellectual capital cost, an absolute understanding of the English language, which is a big factor for attracting business as well.
But we did not grow.
The rest of the world grew in exporting their IT expertise and we became a nation where Associations on top of Associations sprung up in IT industry. The volume of incubators were so many that they required incubation themselves.
But we remain dismal in our revenues when it came to the IT industry.
Pakistani IT Industry stands at 25th position worldwide
Well, it happened because 98% of the countries that grew their IT industry first established solid links with the Investment Banking industry. They educated the capital markets people about how important the field of IT was. They even hired in-house investment bankers to keep their links with the capital markets people.
Countries that launched IT parks first pitched their ideas to the investment bankers instead of the IT people. So much so that Dubai Internet City in the year 2002 amended their charter to allow me to open up an office in their building, which had nothing to do with IT industry. It was an oil company that i was chairing called PetroSAA. And all because they wanted an investment banker to be present amongst the IT people.
Pakistan IT Industry Needs to Help Local Banks Move to the 21st Century
I opened 3 more offices in DIC over the next 4 years. TekStoxx FZLLC, PGM London Ltd, Somerset Capital FZLLC, all from DIC but not IT companies. I also remember being invited by the Malaysian Ministry in 1996 to come and visit their IT park. Since my parents are from Hyderabad Deccan, the Andra Pradesh Chief Minister at that time, Chandra Babu Naidu, specially came to Wall Street to pitch the investment bankers to fund the Hitech City in Hyderabad.
Of course I was pleasant enough to decline his offer because Pakistan is where my loyalties always remained.
The point is, you can have the best idea. Best talent pool. Best pricing. Best scope and best everything, but if you do not have the funding and the IB expertise evaluating your project, you will not be able to grow.
Its only the investment bankers who take the risk and understand the vision and the commercial future value of an IT project.
They are the ones who fund it at the seed level and they are the ones who list it on the exchange for the exit strategy. Great companies in Pakistan like Netsol whose value in my view should be 4 times higher than what it is today are trading at a fire sale. Why? Because there is a disconnect between the IT vision and the ones who buy that vision, the Investment Bankers.
No IT conference invites investment bankers in Pakistan while we attended almost all IT events on Wall Street throughout America as investment bankers. Until this country realizes that the IT industry is so linked to the investment industry that it is like the spring water industry to the bottling industry.
Pakistani Companies like Netsol can be 4 times higher in value than what they are currently trading at if they had help from Investment Bankers.
Until the “so-called” IT experts realize that certain industries are absolutely intertwined with certain others, they will not grow. You do not need to be Sherlock Holmes to understand that.
Our IT industry needs investment bankers and Capital Markets experts. Incubating a start up is not a commitment to the IT industry. It’s the first step. What comes next is nurturing it. Evaluating it. Listing it. Giving it secondary financing for expansion. Creating liquidity for the founders. Giving it its deserved market price. Creating an awareness within the stock analyst community to give it a fair coverage and a million other things is commitment.
Our IT industry needs Investment Bankers and Capital Markets experts
Investment bankers are married to the IT industry since 1986 everywhere in the world. But in Pakistan, IT industry does not even date investment bankers, let alone being married. And that’s why they can not produce results. Because without this marriage, you can not produce the next generation.
Ever wonder why the Pakistani IT industry did not grow in the past 25 years as much as it should have?
India grew. Malaysia grew with their Multi-Media Super Corridor. Dubai grew with the Internet City. Mexico comes in at No. 4 in offshore IT destinations in the world. Thailand, Indonesia, Philippines, Bulgaria, Egypt, Brazil, the list goes on and we are at Number 25 on that list.
A country like Pakistan with the most amazing talent pool, universities overflowing with IT graduates, extremely low intellectual capital cost, an absolute understanding of the English language, which is a big factor for attracting business as well.
But we did not grow.
The rest of the world grew in exporting their IT expertise and we became a nation where Associations on top of Associations sprung up in IT industry. The volume of incubators were so many that they required incubation themselves.
But we remain dismal in our revenues when it came to the IT industry.
Pakistani IT Industry stands at 25th position worldwide
Well, it happened because 98% of the countries that grew their IT industry first established solid links with the Investment Banking industry. They educated the capital markets people about how important the field of IT was. They even hired in-house investment bankers to keep their links with the capital markets people.
Countries that launched IT parks first pitched their ideas to the investment bankers instead of the IT people. So much so that Dubai Internet City in the year 2002 amended their charter to allow me to open up an office in their building, which had nothing to do with IT industry. It was an oil company that i was chairing called PetroSAA. And all because they wanted an investment banker to be present amongst the IT people.
Pakistan IT Industry Needs to Help Local Banks Move to the 21st Century
I opened 3 more offices in DIC over the next 4 years. TekStoxx FZLLC, PGM London Ltd, Somerset Capital FZLLC, all from DIC but not IT companies. I also remember being invited by the Malaysian Ministry in 1996 to come and visit their IT park. Since my parents are from Hyderabad Deccan, the Andra Pradesh Chief Minister at that time, Chandra Babu Naidu, specially came to Wall Street to pitch the investment bankers to fund the Hitech City in Hyderabad.
Of course I was pleasant enough to decline his offer because Pakistan is where my loyalties always remained.
The point is, you can have the best idea. Best talent pool. Best pricing. Best scope and best everything, but if you do not have the funding and the IB expertise evaluating your project, you will not be able to grow.
Its only the investment bankers who take the risk and understand the vision and the commercial future value of an IT project.
They are the ones who fund it at the seed level and they are the ones who list it on the exchange for the exit strategy. Great companies in Pakistan like Netsol whose value in my view should be 4 times higher than what it is today are trading at a fire sale. Why? Because there is a disconnect between the IT vision and the ones who buy that vision, the Investment Bankers.
No IT conference invites investment bankers in Pakistan while we attended almost all IT events on Wall Street throughout America as investment bankers. Until this country realizes that the IT industry is so linked to the investment industry that it is like the spring water industry to the bottling industry.
Pakistani Companies like Netsol can be 4 times higher in value than what they are currently trading at if they had help from Investment Bankers.
Until the “so-called” IT experts realize that certain industries are absolutely intertwined with certain others, they will not grow. You do not need to be Sherlock Holmes to understand that.
Our IT industry needs investment bankers and Capital Markets experts. Incubating a start up is not a commitment to the IT industry. It’s the first step. What comes next is nurturing it. Evaluating it. Listing it. Giving it secondary financing for expansion. Creating liquidity for the founders. Giving it its deserved market price. Creating an awareness within the stock analyst community to give it a fair coverage and a million other things is commitment.
Our IT industry needs Investment Bankers and Capital Markets experts
Investment bankers are married to the IT industry since 1986 everywhere in the world. But in Pakistan, IT industry does not even date investment bankers, let alone being married. And that’s why they can not produce results. Because without this marriage, you can not produce the next generation.