The Hindu Business Line : Motilal Oswal open to strategic partners for MF business

Chennai, April 27 Motilal Oswal Financial Services, whose asset management subsidiary awaits clearance from SEBI for launching mutual funds, is open to the idea of strategic partners for the AMC, the company’s Chairman and Managing Director, Mr Motilal Oswal, told Business Line today.

“While we are not actively looking for partners, we are open to a minority, strategic partnership,” Mr Oswal said.

Motilal Oswal Financial, the stock broking and investment banking company that ended 2007-08 with a 150 per cent growth in net profit (Rs 170 crore), expects no let up in growth in the current year.

Notwithstanding the volatility in the stock markets, the company has not seen any deceleration in expansion of its client-base, which today stands at around 4 lakh. Each month, the company is able to enrol around 25,000 more clients.

Mr Oswal sees a repeat of 2007-08 in domestic insurance companies’ investments in equities— last year, they invested $15 billion (Rs 60,000 crore) into Indian stocks. “This year again they will invest big money,” he observed.

As such, he sees no threat of recession in the businesses of stock broking companies. Motilal Oswal Financial itself expects growth between 20 per cent and 30 per cent in bottomline.

Mr Oswal believes that the long-term story of Indian corporates remains intact. “We see no earnings de-growth,” he said, noting that corporate earnings were up around 20 per cent in 2007-08. His company estimates that corporate earnings in 2009-10 will be around 25 per cent.

On other businesses

For the investment banking division of Motilal Oswal Financial, 2007-08 was the first full year of operations. It did 26 deals during the year and earned Rs 62 crore, which was “higher than projected”. Mr Oswal expects around 40 per cent growth for this division in the current year.

He said that “over the next couple of days” the company will announce a tie-up with a life insurance company for distribution of its insurance products.

Further, Motilal Oswal will start a real estate private equity fund, before December. It has a PE fund, called India Business Excellence Fund. With a corpus of $125 million (Rs 500 crore), it mainly invests in SMEs. Mr Oswal said that the real estate PE will have a bigger corpus.

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