Former Trader Raja Palaniappan Sees Fintech Opportunity in Bonds

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 tofixed-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.

起源是今年早些时候由巴克莱银行选择的八个初创企业之一，在东伦敦的英美末端附近的金融气加速器中花费近三个月。在那里，Palaniappan必须改进他的想法并建立一个原产地的电子平台的工作模型。这两位合作伙伴刚刚完成了一轮天使投资，从一个未公开的风险投资公司提高了850,000英镑（130万美元），并增加了两名员工，将他们的总部头部计入六名。

“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.”

具有讽刺意味的是,印度来自from San Francisco, an hour’s 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 Canada’sOntario Teachers’ Pension Planhiring investment bankers to manage their money. “We’ve 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 says.

Read more:Fintech Start-ups Flock to London’s Silicon Roundabout