Noble, an Anglo-India investment bank, yesterday announced it will undertake small- and mid-cap equity research for UBS in India. According to the agreement, Noble will provide research to UBS's global institutional client base to complement the Swiss bank's existing coverage of the companies included in the BSE100 index.
Noble's equity business started publishing research in India last September. Its 11 analysts and sales people cover the technology, consumer, financial, power and infrastructure sectors. Stocks in its target universe have a market cap of less than $2.5 billion.
"The alliance provides international investors with a safe, transparent and cost effective conduit through which to access a far greater number of stocks that sit below the top 50 companies by market capitalisation in India. What is more, it is an exclusive affiliation that not only allows UBS to provide a new dimension to its integrated offering but also helps strengthen research coverage of small- and mid-caps in India," says Chi-Won Yoon, head of Asian equities at UBS, in a statement.
Saurabh Mukherjea, Noble's head of Indian equities, says that the company opened its Indian offices on the back of demand from its European institutional investor clients who were keen on investing in Indian companies, but felt uncomfortable with some small- and mid-cap companies due to the lack of quality research.
"Indian small- and mid-cap companies come at a 30% to 50% discount to their large-cap peers," says Mukherjea. "But while they are trading at a discount they are often good plays with high quality fundamentals."
He thinks that arrangements like the one between Noble and UBS will become more common in the future, with the larger institutions focusing their research on a small set of the most liquid stocks. And now is a good time for smaller independent companies to grab new people since the layoffs at the larger firms have created a pool of talent that is significantly cheaper than it was a year or two ago.
Noble is an investment bank with a research focus. It produces research on over 250 companies in the UK and India. Its investment banking activities include acting as sponsor, takeover adviser and broker on London's Alternative Investment Market (AIM), as well as a sponsor and broker on the London Stock Exchange. It has offices in London, Edinburgh and Mumbai.