morgan-stanley-gets-merchant-bank-status-in-india

Morgan Stanley gets merchant bank status in India

The bank receives the okay to resume domestic advisory and underwriting services following the dissolution of its joint venture. It also makes two senior appointments.
Morgan Stanley has received an Indian merchant banking licence that will allow it to resume onshore investment banking advisory and underwriting services in this fast-growing country where companies are in constant need of capital to finance their expansions, according to a release issued yesterday.

The bankÆs wholly owned securities company, Morgan Stanley India, had to apply for a new license as it previously conducted these businesses through its joint venture with JM Financial Group, which was dissolved in February this year.

In connection with the licence announcement û which had been widely expected - Morgan Stanley said it has appointed Narayan Ramachandran as its chief executive officer and country head for India and will transfer Aisha de Sequeira from New York to Mumbai to take up a position as head of India investment banking.

These appointments come on the back of a string of new hires over the past seven months as the US investment bank has been busy re-building its on-the-ground presence within investment banking, capital markets, fixed-income and private wealth management. When the JM Morgan Stanley JV was terminated after seven years of operation, Morgan Stanley took full ownership of the equity sales trading business while JM Financial bought out Morgan StanleyÆs stake in the investment banking, fixe- income and retail operations.

All along, Morgan StanleyÆs aim has been to get these operations back up to full capacity as soon as possible and yesterdayÆs release noted that the bank is ôseeking to develop an integrated platform in India that encompasses the full range of businesses the firm conducts globallyö. It also stressed that India, where the firm has been active since 1993, is a strategic priority and an area of continued investment.

Ramachandran, who has been with Morgan Stanley since 1996, has been based in Mumbai since early 2006 and is currently head of the firmÆs investment management division (MSIM) in India. He has also held a number of senior positions within MSIM in New York and Singapore, including global co-head of emerging markets. He joined Morgan Stanley from Rogers Casey and has 20 years of investment experience.

de Sequeira, a managing director, has been with Morgan StanleyÆs mergers and acquisitions group since 1995 and has extensive investment banking and cross-border M&A experience in a wide range of industries. Over the past seven years, she has focused on advising global consumer companies, including Unilever, PepsiCo and May Department Stores.

In her new role, she will be responsible for overseeing the full spectrum of investment banking services in India û both on the advisory side and with regard to capital raising exercises for clients. According to sources familiar with the bank, Morgan Stanley has been wishing to move de Sequeira to India for some time to make the most of her cross-border M&A expertise and has been waiting for a suitable role to open up.

ôAishaÆs new responsibilities demonstrate Morgan StanleyÆs willingness to leverage the expertise of our senior bankers by placing them in key positions in important growth areas around the world,ö said Cory Spencer, the firmÆs global co-head of investment banking. ôHer appointment, along with a number of additional senior hires across advisory and capital markets, significantly enhances our ability and commitment to tap into IndiaÆs dynamic and developing market.ö

Last month, the bank hired Sumeet Puri as a managing director and head of equity capital markets in India and in June it poached four people from its former joint venture partner JM Financial for its investment banking division. Those hires included VK Bansal, who at the time was head of investment banking at JM Financial, as well as DS Kamal Yadav, Divyesh Desai and Sachin Wagle.

Puri was head of Asia execution and syndication at Merrill Lynch until late January last year when he was appointed head of ECM and structured origination for India at DSP Merrill Lynch and relocated from Hong Kong to Mumbai. But after only five months in his new job Puri decided to leave Merrill, where he had spent the past 13 years of his career. He had been on gardening leave since June.

While Morgan Stanley was left without any investment bankers on the ground in India when its joint venture was dissolved, it did have a number of bankers offshore covering the country, which has helped ensure a smooth transition. Indeed, the capital markets team has continued to do international deals for Indian clients and early this summer the bank was a joint bookrunner on the $2 billion ADS follow-on offering for metals producer Sterlite Industries as well as on HDFC BankÆs $607 million ADS follow-on.

According to banking sources involved in the Indian market, the US bank also has a number of joint mandates for domestic IPOs that it has been able to secure subject to it receiving the necessary operating license. And given that some of those deals are expected to take place before the end of this year, it seems likely that Morgan Stanley will be able to do its first domestic deal under its own name within a couple of months of it receiving the license.

However, it is worth noting that the US firm is already a well-known name among Indian issuers since its joint venture was actually named JM Morgan Stanley. Similarly Merrill Lynch has been able to continue operating under the DSP Merrill banner that previously signified its joint venture with Hemendra Kothari. According to Indian observers this does put these two banks in a slightly better position than Goldman Sachs, which has had to build its investment banking brand from scratch after it ended its Indian joint venture, which was named Kotak Mahindra.
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