The Hindu Business Line : SBI Caps seeks to regain share in IPO market

IN a bid to regain its share in the initial public offering (IPO) market, investment banker SBI Capital Markets has initiated a two-pronged strategy for the current fiscal. It will expand the network of its retail broking outfit and empanel more foreign institutional investors.

This strategy is expected to strengthen the distribution capabilities of SBI Caps, a subsidiary of State Bank of India, which recently hived off its broking business into a strategic business unit. Mr Indrajit Gupta, Managing Director, SBI Capital Markets, told reporters on Tuesday that the broking unit would open 50 more retail outlets over the next two years. It currently has seven branches.

A major player in the IPO market some years ago, SBI Caps almost missed the recent big-ticket IPO boom. But it could increase its market share in the debt market.

The company is also looking to expand in the project advisory and knowledge management services segment.

"We want to retain our number one position in project advisory as this is a growing area," Mr Gupta said.

The company may even set up a separate division for cross-border projects, as it has evoked a good response, he added. SBI Caps has also entered into strategic alliances with institutions in Bangladesh and Sri Lanka for project advisory functions. These alliances are for 12-18 months and later will be scaled to joint ventures, Mr Gupta said.

SBI Caps has tied up with Industrial Development Leasing Corporation in Bangladesh for a $50-million water project. In Sri Lanka, it has tied-up with Margin Bank, which is owned by Bank of Ceylon, and is working on two to three projects worth $15-20 million.

SBI Caps has a representative office in the UK and is also looking to expand operations in South East Asia and the US.

These offices will be used to tie up with FIIs.For the fiscal 2004-05, SBI Caps posted a net profit of Rs 88 crore (Rs 63 crore), registering a 40 per cent increase over the previous year.

The company's total income was at Rs 174 crore (Rs 138 crore). Fee-based income grew to Rs 52 crore (Rs 31 crore), while fund-based income, which includes leasing and hire purchase, grew to Rs 41 crore (Rs 27 crore).

SBI Caps plans to exit from leasing and hire purchase business in the next two years.

Mr V. Gopinathan, Executive Director (in-charge of the broking subsidiary), said that SBI Caps is working on the public issues of Bank of Baroda (around Rs 1,400 crore), Syndicate Bank (Rs 300 crore) and Provogue (around Rs 60 crore).

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