The Hindu Business Line : Japanese cautious about `quality of company': Nomura

INDIA head-investment banking at Nomura International, Mr Vikas Sharma, says that while Japanese investors are interested in Indian companies, they are very cautious about the quality of the company they invest in.

He adds that they are looking and working with a few more Indian companies for public offering without listing (POWL). India-focussed funds form a small part of POWL demand, he says.

Excerpts from CNBC-TV18's exclusive interview:

Tell us a little more about POWL and how it works and the way Japanese investors are buying into some of these large issues?

Clearly, Japanese investors are interested in India and the top Indian companies are getting a lot of attention. Stocks such as ICICI Bank, which are a reflection of the economy, or sectors in which India is doing well, like IT and services are getting attention from Japanese investors.

POWL is just a part of the ADR programme, which runs globally, but this one targets Japanese investors instead of other global investors. So this is just an additional demand. There is not much difference between an ADR and a POWL; we just file a securities registration statement (SRS) in Japan and then we can target Japanese investors for high quality large companies in India.

Do some of those India-specific funds, which have been raised in Japan in the last six months, have a substantial amount in corpus right now?

India-focussed funds are only a small portion of the demand. The Japanese market is a retail driven market, so Nomura sells it through its own network of sales persons to the retail investors, and so the demand you see in ICICI Bank or Infosys is the retail demand. The Japanese retail is buying this stock.

Could you give us a sense of when this Japanese institutional appetite is going to pick up for Indian paper and could you also put a money figure for the ICICI Bank ADRs?

We are seeing a number of Japanese funds being raised, for example Nomura raised approximately $1 billion for India-dedicated funds in June.

One will see Japanese institutional money coming into India and India is on their radar screen. So that is the build-up, which is happening.

We cannot give the amount of money, which came into ICICI, but clearly the Japanese demand was a major part of the global book.

Analysts are making a point that India is emerging as an asset class now, on its own, and do you see that investor appetite remaining in Japan for India?

Japanese investors unlike global investor or an institutional investor are very cautious about the quality of the company, they are conscious about the equity story of the company and also conscious about what it addresses in the long-term. So it is not concerned about the portfolio weightage or index weightage and so if there is a good equity story from India, then yes, they are looking at some companies.

Any other plans to raise any specific money for India in the foreseeable future?

As a business we are always planning but nothing is on the radar screen yet.