The Hindu Business Line : ‘India is hot, be it debt or equity’

Chennai, Sept. 13 What’s currently hot on the radars of institutional clients? “Due to sub prime, a lot of clients are looking at FMCG (fast moving consumer goods) but I think overall India is hot, be it debt or equity,” says Mr Jayesh Mehta, Head - Institutional Client Coverage Group (ICCG) in India at DSP Merrill Lynch. “Globally principal investment will be more conservative,” he foresees, in an email interaction with Business Line.

Mr Mehta, who has been instrumental in building the firm’s debt trading (rates) and sales/ structured solutions group in the country, was earlier heading the debt markets area in DSP ML. His new role involves developing and nurturing top-level management relationships at the institutional level

Excerpts from the interview.

In your previous work, what was your target clientele for the debt sales market? Who are the competitors, and what is your market share?

Mainly focused on institutional clients i.e. mutual funds, bank and insurance companies. All other banks with investment bank focus would be considered as competition. We normally don’t track the market share, as profitability and volume do not always go together.

What was your experience in the debt private placement market? What issues need to be addressed in the private placement space?

We have good norms on private placement, nothing much needs to be changed. We are possibly lacking on the variety of investor base.

Your views on what the sub-prime crisis means to India.

Traders, particularly multinational have gone slow, but I personally think there should not be much impact on local markets. One needs to be careful on the credit exposure. If the borrower is repaying debt by business cash flow and not refinancing, it should not make much difference. Mainly rollovers should be watched more carefully both on asset as well as liability side.

Does ICCG cover both equity and debt, investing and borrowing?

Yes.

Who are your clients in ICCG?

Typically, large clients, who would have multi product businesses. The idea is that as product heads have relationship at dealing level and it’s not possible for all product heads to get to senior management level of clients, ICCG can become a focal point particularly for senior management of client rather than dealing with multiple product people.

What will be the range of activities, products covered?

All products of ML will be offered to clients. Equities, forex, interest rate, credit, commodities etc.

How do you expect internationalisation of local institutions to happen at a faster clip, and what are the obstacles?

Banks with international branches are already there; obstacle is the structural issue. MFs have been slowly allowed more and more investment offshore; obstacle is their focus only on vanilla investment whereas there would be a good demand for structured products.

What skills are short in supply in financial services?

Manpower is short in supply and most of the new players want to give a full suite of products.

On the recent ECB (external commercial borrowings) curbs and what these mean to institutional clients.

Not much, as most of them had import of capital; only the arbitrage segment would feel the restriction.

Where do you see the Indian capital markets headed to, in the near and medium term?

On the equity side we are much ahead and progressed a lot. On the debt capital market front, locally, we have a long way yet, to go.

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