Raja Palaniappan thinks he has an idea that Wall Street is
going to hate.
The trader-turned-tech-entrepreneur wants to do to the
business of private bond placements what electronic platforms
are doing to
fixed-income trading: cutting out the investment
banking middleman and providing investors (and issuers) with a
cheaper, more efficient service.
Palaniappan, 29, clearly sees the opportunity, having worked
for several years as a bond trader in London at Credit Suisse
and Nomura Securities Co. He recalls watching his investment
banking colleagues prepare road shows for corporate borrowers
and realizing that issuance was an incredibly manual
process, and there was quite a bit of money that was being left
on the table.
So he teamed up with a former Nomura trading colleague,
Robert Taylor, to launch a fintech start-up called Origin
Markets. The outfit is creating an electronic platform that
will allow corporate borrowers to offer private placement bonds
directly to institutional investors.
Origin was one of eight start-ups chosen by Barclays Bank
earlier this year to spend nearly three months in its fintech
accelerator in East Londons Mile End neighborhood. There,
Palaniappan got to refine his idea and build a working model of
Origins electronic platform. The two partners have just
completed a round of angel investment, raising £850,000
($1.3 million) from an undisclosed venture capital firm, and
have added two staffers, bringing their total head count to
We intend to use the £850,000 and the new staff
to showcase the platform to potential clients and aim to launch
to the public early next year, Palaniappan says.
Our clients are institutional investors on one side, but
on the other our clients are corporate treasurers.
Ironically, Palaniappan hails from San Francisco, an
hours drive north of Silicon Valley. But after earning an
electrical engineering degree from Massachusetts Institute of
Technology, he went to work at Lehman Brothers International in
London, then joined Nomura when Lehman collapsed.
Later, on the corporate bond desk at Credit Suisse, he
watched as hedge funds repeatedly made tidy profits by
capitalizing on their access to corporate bonds at issuance and
promptly flipping them in the secondary market.
Palaniappan sees a shift in influence from sell-side firms
to the buy side, with big funds like Canadas
Ontario Teachers Pension Plan hiring investment
bankers to manage their money. Weve seen an
interest from those guys to explore other ways of deploying
their capital rather than just waiting for the syndicate
pipeline, he says.
One of the attractions of setting up in London is that the
private placement business is less developed than in the U.S.
and offers greater scope to a disrupter like himself,
Palaniappan says. He also believes Europe is a particularly
ripe market because banks tend to lend to their own national
champions. Origin will give French and Dutch institutions, say,
an opportunity to buy privately placed bonds from a German
company that they might never see in the current setup.
Palaniappan acknowledges that start-up funding is more
plentiful and valuations more lofty in the U.S.
But I think fintech is one of the areas in which London
does have a competitive advantage because greater influences,
such as mentorship from other entrepreneurs, are here, he
Fintech Start-ups Flock to Londons Silicon