Bank of America-Merrill Lynch (BofA-ML) aims to double revenues in the next three to four years, leveraging from the integration of the Bank of America and Merrill Lynch teams that covers most segments of the capital markets in India, according to the President and Country Head Kaku Nakhate.
“We can’t buck the global trend, but as BofA-ML, we will be able to take advantage of the platform we have on the banking and securities side, and can make the most of the opportunities,” said Nakhate. “We are one of the top three in most segments and will be back in equity issuances this year. Teamwork is going to be our mantra.”
BofA-ML expects opportunities from share issues, equity sale to qualified institutional investors, mergers and acquisitions (M&As), bonds products among others. It also plans to expand its corporate banking in an economy aspiring to grow faster than its current rate of 8.5 per cent. As one of its key centres in Asia, BofA-ML India will develop international business, including cross border M&As and fund raising.
The company, which has slipped in ranking as the arranger of equity issues over the past two years, aims to have a firm footing in this area. It plans to bid to be an arranger for state-run companies, which may sell shares worth Rs 40,000 crore during the current financial year.
Nakhate, 44, who started her career at D S Prabhudas (DSP) and was named to succeed Kevan V Watts as India head from June 23, re-joined BofA-ML after about a year-long stint as the vice-chairperson of JPMorgan in India. She started her career in 1989 as a research analyst at D S Prabhudas under the chairmanship of Hemendra Kothari, a third generation stock broker and a former president of the Bombay Stock Exchange. DSP gradually got absorbed by its joint venture partner Merrill Lynch over the past 15 years.
Share sales in India grew more than three times in the first half of 2010 over the year-ago period. But, issuances tapered off in the past few months, following sovereign debt crisis in Europe and concerns over economic growth in the US.
“Global environment continues to be worrisome, but India has a good chance compared with many other emerging markets,” said Nakhate. “There is an appetite for equity issues. On inflows, India will continue to be overweight.”
BofA-ML expects inflows of $15-17 billion from foreign institutional investors this year. They were about $17.5 billion in 2009. “If markets stabilise, it won’t be difficult for the government to sell shares of public sector companies. The officials in charge of divestment are doing a good job and are themselves reaching out to investors,” she said, adding, “There’s always an appetite for good companies.”
The second quarter earnings of companies should be ‘decent’, said Nakhate, though she is cautiously optimistic on the outlook for local stock markets. “We could see some downturn if money gets sucked out for large initial public offerings in other markets, but it should get buoyant after September,” said Nakhate. “This year, the inflows could be the same as last year if not more, especially if the US gets over its troubles.”
