A banker with international experience and expertise, Siddhant Raj Pandey now runs Nepal's first international private equity fund Business Oxygen Private Ltd (BO2). BO2, which is a part of International Finance Corporation (IFC’s) global SME ventures initiative, has been supporting the country's small and medium enterprises through capital financing and advisory support. Former CEO of Ace Development Bank, Pandey ventured into entrepreneurship in 2013 by establishing White Lotus Centre. In a conversation with Ashim Neupane of New Business Age, Pandey talked about his banking journey over the years and how he got into the world of entrepreneurship, among many other topics.
Entering the Banking Sector
After completing his undergraduate degree from Virginia Tech University in the United States, Pandey got a job in the bond market at Bloomberg Financial Markets in New York in 1989. After working for a few years at Bloomberg, Pandey came to Nepal in 1991 to visit his parents. During that time, he wanted to learn about the banking system in Nepal, so he joined the then Nepal Arab Bank (Now Nabil Bank) as an intern in the credit and marketing department. After spending almost six months in Nepal, Pandey joined the International Fund for Agricultural Development (IFAD) in Rome where he was in a team working for food security in Sudan. Then, Pandey wanted to pursue a Master’s degree in development economics, so he left his job and joined the University of Bristol. Pandey came back to Nepal and joined the management team of Ace Finance Company and worked for three years. He again went abroad, this time to England to work in Merrill Lynch in 1998 where he worked for four years. In 2002, he joined Riggs Bank as a director and worked there till 2005.
Coming back to Nepal
While working in international banks, Pandey had to travel a lot. As Pandey used to look at the South Asian markets, he used to often travel to Nepal. He said that he always wanted to come back home and share the knowledge from his international experience for the development of the country.
During 2005, Riggs was having massive problems with compliance issues worldwide, so the US federal government shut it down. At that time, Pandey also got married, and the couple decided to come home in 2005.
Transforming ACE into a Development Bank
When Pandey was offered the CEO post of Ace Finance, he told the board that he would take the role on a condition that he should be allowed to upgrade the company into a development bank. In 2007, ACE Finance was upgraded to a development bank. He spent almost nine years in the ACE Development Bank (which was acquired by Nepal Investment Bank Limited in 2017) serving two tenures as CEO and left the bank in 2013.
During his tenure at Ace, Pandey also established ACE Capital (now NIBL Ace Capital), which is one of the leading merchant banks of the country.
Sharing his experience of working at Merrill Lynch, Pandey says that he had to go through a registered person’s examination, something not carried out in Nepal. As Merrill Lynch is an international American bank, Pandey had to sit the NIST Series VII examination, which he says is a comprehensive and difficult test. Pandey also sat a British examination called SFA needed to work in a bank in England. Pandey shares that he learned about the international money market – bonds, equities, hedge funds, among others – during his stint at Merrill Lynch.
Following the Dream
Pandey always wanted to be a bridge between the world of development and the world of financing. This led to the establishment of White Lotus – a development advisory company – in 2013 which worked in different projects.
During that period, a tender was called for Business Oxygen (BO2) – a part of the Global SME ventures initiative of the International Finance Corporation (IFC), the private sector arm of the World Bank. As the company, which initially won the bid, had gone into a stalemate for three years, the IFC had retendered it for the management of the private-equity fund. Pandey successfully bid for BO2, which is the first private-equity global fund for Nepal. Pandey says he is very happy to run the private-equity company.
Difficult Initial Phase as an Entrepreneur
After shifting from the banking sector to become an entrepreneur, Pandey had to face a number of difficulties in the initial phase. He shares that the success rate in entrepreneurship is very low. But Pandey was always focused on his goals and targets, despite failed bids for different projects during the initial stages. As the saying goes, battles have to be lost to win the war, Pandey never saw his failed bids as a defeat. He says, failure didn’t drag him down as BO2 has invested in 10 ventures, and those companies have been providing employment opportunities to 60,000 people indirectly. Pandey says his goal now is to bring foreign direct investments (FDIs) through BO2 for the development of small and medium enterprises. “The preference should be given to small and medium enterprises – where large numbers of people get employment opportunities – for the development of the country. People who are employed can spend money and pay taxes. This is how the country gets developed,” he shares.
Wanted to Become a Journalist
As someone who loves to write on contemporary issues of business and finance, Pandey's initial interest was journalism. According to Pandey, he always wanted to be a journalist until he started university. After appearing for the SLC examinations, Pandey also interned at the Indian Express in Delhi for three months. During his school days, he had started a magazine called ‘Society Today.’ He also used to write articles for The Rising Nepal.
The 1980s was fabulous in terms of the development of the technology and financial system in the west, and he says being in the west during that period was an incredible experience. In 1987, Black Monday happened, where stock markets around the world crashed. At that time, Pandey was pursuing his undergraduate degree, and he found the incident interesting. He feels that that incident was the turning point in his career, as he decided that he would get into the world of banking and finance.
While at Merrill Lynch, Pandey had to work from eight in the morning till nine in the evening. The New York Stock Exchange closes at 4.30 pm, which is 9 pm in London. So, Pandey had to work almost 12 hours a day at Merrill Lynch. “I see graduates want to become managers in banks overnight. With so many banks in the market, younger people are getting promoted much earlier,” he shares. Pandey talks about the Peter Principle, which states, “employees are promoted based on their success in previous jobs until they reach a level at which they are no longer competent.”
Suggestions for Young People
He says that there is a need to dispel the myth that a nine to five job is ideal for young people. “The older generation thinks that only youths who are not serious go to work in entrepreneurship. I see a lot of entrepreneurship happening in the information technology field. But, almost 95 percent of the ventures fail. It is not that easy to succeed in this field, and it is not easy to be another Mark Zuckerberg, Elon Musk, and Steve Jobs overnight,” Pandey shares, adding he has been telling youths to learn first, and explore the opportunities. Pandey believes that it is not possible to succeed just after graduating from university. For youths looking to start a venture, Pandey suggests that they learn and research what the market needs first in order to succeed in the world of entrepreneurship.