JM Morgan to set up trading firm

JM Morgan Stanley group plans to form a new company to make its entry into commodity trading in India.

The group has also drawn up plans to increase focus on equity products and more than double the branch network of its retail services to twenty five by March 2006.

"We have applied to the commodity exchanges for permission to begin its commodity trading operations. Besides launching more products we are also planning to expand our branch network," Nimesh N Kampani, chairman and managing director of JM Morgan Stanley Pvt Ltd, said.

JM Morgan Stanley Retail Services would be repositioned as a financial services company and its name changed to JM Morgan Stanley Financial Services Pvt Ltd.

The group's mutual fund businesses -- JM Financial Mutual Fund -- is making a shift towards equity products. It changed its strategy about six months back when it started to examine its portfolio of products which has largely been debt oriented.

At present it has assets under management of about Rs 3,000 in its debt schemes, Rs 1,000 in the arbitrage scheme and just about Rs 150 crore in equity.

"Interest rates are stable, inflation is low. This is the time to invest in equity. In the next three years we expect returns at the rate of 14-15 percent annum from the equities," Kampani said, adding that it was not late to shift focus towards equity.

Besides the newly launched JM Emerging Leaders Fund which plans to mop up at least Rs 200 crore, JM Mutual Fund is betting on its equity portfolio to grow to about Rs 1,000-1,500 crore by March 2006 through launch of three more mutual fund schemes by March 2006.

To improve distribution, JM Financial & Investment Consultancy Services, which looks after the mutual fund business plans to add four more branches to its existing network of seventeen.

"Three of the branches are likely to come up in Kochi, Kanpur and Mangalore. For the north east region, Guwahati could be a good location but we have not decided yet," Krishnamurthy Vijayan, CEO of JM Financial Asset Management Pvt Ltd, said.

On JM's plan to enter banking, Kampani said, "We have a non banking financial services company and we would first like to grow it." The NBFC could be JM's vehicle into banking, Kampani said while decline to elaborate.

JM Morgan Stanley Pvt Ltd which is focusing on capital raising, mergers and acquisitions, private equity and advisory also operates in retail distribution and fixed income sales and trading through JM Morgan Stanley Retail Services Private Ltd and JM Morgan Stanley Fixed Income Securities Pvt Ltd.

JM Morgan Stanley Securities Pvt Ltd operates in institutional equity sales and trading and research.

Since 1999, JM Financial group and Morgan Stanley group have been managing their investment banking, institutional equity sales and trading businesses in India through their joint ventures -- JM Morgan Stanley Pvt Ltd and JM Morgan Stanley Securities Pvt Ltd.

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The gameplan

• To form a new company to make its entry into commodity trading in India
• JM Morgan Stanley Retail Services to be renamed and repositioned as a financial services company
• Its branch network to be doubled by March 2006
• JM Financial Mutual Fund to shift focus towards equity and target Rs 1,000-1,500 crore equity portfolio by March 2006 through launch of new funds