The Hindu Business Line : Daiwa Securities SMBC plans second India-dedicated equity fund

MR YOSHIHIRO Hasegawa, Chief Representative of Daiwa Securities SMBC, talking to media at Indian Chamber of Commerce in Kolkata on Tuesday. - A Roy Chowdhury

Kolkata March 13

Daiwa Securities SMBC, one of Japan's top investment banks, is planning to launch its second India-dedicated equity fund for the Japanese investors.

Mr Yoshihiro Hasegawa, chief India representative, told Business Line that another India-specific equity fund from Daiwa Securities SMBC was on the drawing board.

Daiwa Securities SMBC, which had opened a representative office in Mumbai a year ago, is now carrying out a detailed business feasibility study, which would include positioning of the proposed fund, processing global equity offerings by some Indian companies and the prospect of floating a joint venture to upgrade its Indian operations.

Drop in Valuation

Daiwa Securities SMBC's first India-dedicated fund, managed by Merrill Lynch and launched in 2005, had a corpus of $750 million.

"The second fund, which would be designed and structured in the next few months, might be different in terms of its portfolio, but the corpus is unlikely to be more than $1 billion," Mr Hasegawa said.

The proposed fund may look beyond the top 50 Indian stocks in terms of market capitalisation or its basket may be for a sector such as information technology.

"We are taking in all appropriate inputs before giving the fund a final shape," he added.

The current drop in valuation for the Indian stocks was not a hurdle to launch a new fund; instead it may provide opportunity for entering the market at a lower level.

The first India-dedicated equity fund in Japan was floated in 2004.

Investment Avenue

Currently, there are 10 such equity funds in operation for the Japanese investors. In the last two years, Infosys Technologies and ICICI Bank accessed the Japanese primary equity market through placement of part of their ADR float. The present total Japanese investment in Indian equities is estimated at around $3.3 billion. He expected that both retail and institutional investors are looking for long-term opportunities in the Indian equities and also bonds. "We strongly believe that Indian GDP and market capitalisation of Indian companies will steadily grow in tandem in the next few years. This is why we are India," Mr Hasegawa stated earlier at an interactive session organised by the Indian Chamber of Commerce.

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