Newsmaker: Ketan Parekh

Bull in the pen

Ketan Parekh,
Stockbroker

For much of the tech boom years, he was the market's mover and shaker. He even had a group of stocks named after him (K-10). But last Wednesday, when the Securities and Exchange Board of India (Sebi) lowered the boom by banishing him from the capital markets for 14 years, the markets barely acknowledged Ketan Parekh.

It was left to the print media and TV to bring back images of the man, his role in the 2001 stock market scam, and his place in the hall of ignominy.

So who is the real Ketan Parekh? Unlike his better-known predecessor, the late Harshad Mehta, Parekh's antecedents were far from humble. His family was already running a flourishing brokerage house Narbheram Harakchand Securities "" abbreviated to NH Securities later on "" and it was one of the main institutional brokers in the country.

But Ketan was not destined to run a humdrum brokerage house, however profitable it might have been. An early inkling of that was available as early as 1992, when Ketan "" then on the fringes of Harshad Mehta's circle of admirers "" was tarred slightly in connection with the Canbank Mutual Fund deals.

But Ketan, who was actually closer to Harshad's brother Ashwin Mehta, managed to stay out of the shadow of notoriety. The world had little time to think about him then.

Things changed though with the arrival of the technology boom. From a fledgling start in 1998, it ballooned to gigantic proportions in 1999 and 2000, and that was when Parekh came into his own. He was one of the early birds to discover the potential of technology, media and entertainment stocks. So much so, that his bullishness in specific infotech stocks earned him the title of Pentafour Bull.

In the frenzy of 2000, when the Sensex crossed 6000, Ketan was said to have had huge holdings in almost all the major tech stocks. Among his early advisers was Ashwin Mehta.

The tech boom came and went, but Ketan managed to dodge the spotlight. The reason for this was his self-effacing character, his tendency to stay out of the public eye. Where Harshad loved publicity, Ketan shunned it. Very few people in the media even knew what he looked like.

According to close associates, Ketan is an intensely shy, private and serious person. A graduate of Mumbai's HR College of Commerce, Ketan went on to become a chartered accountant. He was obviously very good at the subject, for he was among the rank-holders when he passed his CA exams in 1985.

If the end of the tech boom failed to bring Ketan out of the woodwork, the Budget of 2001 certainly did. Though everyone appeared gung-ho about the Budget, the market gave it the thumbs-down by plummeting a whopping 172 points the following day. A concerned finance ministry asked Sebi to investigate. That's when it found a can of worms, and Ketan Parekh next to it.

Investigations revealed that Ketan had got into a financing arrangement with the Madhavpura Co-operative Bank, which looked far from being above board. A pay order default to the Bank of India worth Rs 130 crore suddenly turned the heat on him.

Further investigations revealed how Parekh had not only used his own brokerage houses but also Credit Suisse First Boston to systematically ramp up the prices of his favourite scrips.

Marketwatchers, who have been tracking his career, say that it's his association with the stars of the Mumbai film industry that may have proved his undoing. Others, though, say he didn't appear to be the kind of person to be star-struck. Still, he was roped in to turn around Amitabh Bachchan Corporation Ltd.

But there's little doubt that he was the market's main driving force in 2000, and this status led to changes in his lifestyle. Among other things, he acquired several Cadillacs.

The formation of a joint venture with Himachal Futuristics and Kerry Packer of Australia "" aborted later "" was the high point of his career. One sign of growing hubris was his foray into real estate "" he had inked a deal to buy ICICI's building in south Mumbai for Rs 75 crore. The deal went cold when the markets crashed after 2001 and Sebi was on his trail.

One reason for Ketan's downfall was his excessive exposure to stocks that crashed in 2000 and 2001. If the market had held up then, he could have probably escaped the harsh glare of adverse publicity.