• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

All our options are open on new tie-up, says JM Financial

Advertisement

Mumbai Feb. 22 Morgan Stanley and JM Financial on Thursday announced that they will be ending their seven-year partnership in the investment banking and securities businesses.

This is in keeping with the recent trend among international investment banks to go it alone in India to get a larger pie of the country's booming market for financial and advisory services.

J M Financial will sell its 49 per cent holding in institutional equity broking company J M Morgan Stanley Securities Pvt Ltd to Morgan Stanley for $445 million (Rs 1,970 crore). Simultaneously, Morgan Stanley will sell its 49 per cent holding in J M Morgan Stanley Pvt Ltd to J M Financial for $20 million (Rs 88.5 crore). This joint venture is an investment banking company, and is also engaged in fixed income, equity broking, wealth management, advisory and distribution activities.

"We are buying at book value but selling at a negotiated price," said Mr Nimesh Kampani, Chairman of JM Financial group, which he established in 1973.

Institutional broking (in which JM is selling) constitutes the largest chunk of the combined business of the two joint ventures with investment banking operations coming next, he said.

The decision to part ways was Morgan Stanley's, said Mr Kampani.

He agreed that there were advantages in operating jointly with an overseas partner, "but what to do if one partner does not want to stay?"

Morgan Stanley said that it is now the right time for it to develop a wholly owned full-service India platform.

"Morgan Stanley will expand its wholesale businesses and develop a platform in India that is fully integrated with its global footprint," said the company in a statement.

Mr Kampani said that JM was open to another partnership: "All our options are open. We can always tie up with someone if we get a good proposal."

But the immediate task would be to establish its own institutional equity broking and equity research operations, he said. JM would also focus on the private equity, real estate investment, and wealth management businesses.

The company will hire around 100 employees in a year's time. "Our focus is going to be profitability," he said.

JM Financial and Morgan Stanley will not hire each other's employees for two years, he said. JM Financial gained 3.5 per cent on the BSE, to end the day at Rs 1,002.50

There were 25 transactions that the joint venture has committed to, and these will be completed in a year's time, said Mr Kampani.

TREND:

Kotak Mahindra Bank last year bought out Goldman Sachs' 25 per cent stakes in two joint ventures. The foreign firm said it would be establishing its own investment banking and securities operations in the country. Before that Merrill Lynch raised its stake in DSP Merrill Lynch to 90 per cent, buying a 50 per cent stake from its Indian partner Mr Hemendra Kothari for $500 million. Both the overseas players ended partnerships that were nine-ten years old.

On whether there is a business case for domestic financial institutions in a scenario of cross border M&A activity where pan-global players would have an advantage, Mr Kampani, said: "In every country, you will still find two or three domestic investment banks that are very strong."

More Stories on : Investment Banking | Announcements | Financial Services | Mergers & Acquisitions

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
2nd round of winter rains for North from weekend

Copyright © 2007, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line