JM Fin sets sights on $1 bn valuation

Betting high on the unprecedented growth in investment banking and brokerage business in the country, financial conglomerate JM Financial expects its valuation to rise by at least 20-30 per cent to touch $1 billion within a year.

"Firms are even getting $1 billion valuation for their securities business. I am happy about that. We had a transaction with Morgan Stanley of around $425 million and own 50 per cent in ASK Securities, say at $ 12 million. If you scale it up substantially, you reach a valuation of $1 billion at a short time," Nimesh Kampani, chairman of JM Financial group, said on Monday.

The company has 30 deals (IPOs and M&A) under its pipeline. The valuation of the group stands between $700 million and $800 million.

JM Financial group, which has strong presence in investment banking, retail broking, high networth individual clientele and asset management business, recently acquired 60 per cent stake in the ASK Securities, which has significant presence in the institutional broking space for Rs 58.14 crore.

Four months back, the group had given up its foreign institutional investor and research business to its venture partner Morgan Stanley for $425 million (Rs 1,912 crore).

The financial services sector in India has been witnessing tremendous growth since the last two to three years.

With a buoyant stock market performance and high corporate growth, the investment banking and broking firms are attracting higher revenues, resulting in better valuation.

These companies are also on the radar of global finance companies, which want to play a bigger role in this crucial sector. The recent deal with Japanese major Nomura has pegged the valuation of Enam Financial around $1 billion.

"There exists a substantial amount of opportunity for all three businesses. Besides capital markets, private equity offers a great deal of potential. Growth in economy will maintain the 9-10 per cent rate. Substantial investments are being made in the infrastructure sector. This all leads to bigger scope for investment banking, mergers & acquisitions and private equity," said Kampani, at the launch `JM Contra Fund by JM Mutual Fund.

The group already has $ 225 million PE fund, a $ 300 million real estate fund and a 75 million special fund. Its AMC business has grown fourfold in last one year and holds assets worth $1 billion.

In its stock market view, the JM Group expects the Sensex to touch 21,000 points by 2009, a 15 per cent per growth annum.

"Indian markets are now integrated with the world and prone to global shocks. Indian markets have been laggard in the region with just five per cent returns in last six months. But, we expect the Indian market to catch up with the rest in the region in second half of CY2007. If we assume Sensex to continue to rise 15 per cent per annum in line with the nominal GDP growth, the index should rise to 20,966 points by December 2009," Kampani said.