Morgan Stanley to enter new businesses in India

Global investment bank, Morgan Stanley is looking at expanding in India by entering into fixed income business, building a strong team to explore opportunities in private equity space and foraying into private wealth management business. It had recently discontinued its 10-year old relationship with Nimesh Kampani's JM Group.

The new plans would supplement the US-based firm's existing businesses in the country like institutional equities, asset management and investment banking.

To begin with, Morgan Stanley is expected to appoint a person to head its local investment banking division and a CEO for India in the next few months, senior executives said.

Morgan Stanley will also apply for appropriate licences after its separation settlement is finalised by the end of the April-June quarter.

One of the US-based firm's first priorities will be to develop an onshore investment banking team by hiring high-quality bankers domestically and internationally, from within Morgan Stanley and externally.

"We have strong offshore capabilities for handling cross-border mergers & acquisitions and underwriting international capital markets transactions. We will now focus on building an onshore investment banking business in India," said Matthew Ginsburg, Morgan Stanley's Hong Kong-based Head of Investment Banking for Asia Pacific.

The separation of Morgan Stanley from its Indian partner, the JM Group resulted in the purchase of the onshore investment banking business developed by Kampani, by the JM Group.

Ridham Desai, co-head of the institutional brokerage division said, "We will continue to invest in our strong institutional equities business".

Morgan Stanley was the majority owner of this unit under the JV structure and has been the prime driver of the business. Morgan Stanley is among the top three institutional brokerages in India.

The recent purchase of a 3 per cent stake in the National Stock Exchange by Morgan Stanley further underscores its commitment to India's equity markets, officials said.

The US-based investment bank said that, subject to appropriate licences, it was looking to develop a fixed income business in India, focusing on sales and trading, and research. In course of time, it will consider private wealth management opportunities as well.

Morgan Stanley, which raised a US$ 515 million Asia-dedicated private equity fund in August 2005, is also strengthening its team in India to focus on private equity opportunities. Historically, the fund was mainly focussed on China, Korea and Singapore.

Morgan Stanley's real-estate investing arm has also been active over the last year, buying stakes in a number of leading property companies, including Bangalore-based Mantri Developers and Mumbai-headquartered Oberoi Constructions.

A company spokesman noted that Morgan Stanley had been operating in India for over 14 years and its decision to separate from the joint venture platform reflected its commitment to the market.

"It is an exciting time for the firm and our people. We already have over 900 employees on the ground", he noted. "We are confident about India's future and want to invest and expand."