JM, Morgan Stanley float 2 JVs

The erstwhile partner of JM Financial, Credit Suisse First Boston, meanwhile, announced from Hong Kong, that "it has terminated its letter of understanding with JM Financial in India." "CSFB has had an excellent relationship with JM for the last five years, but considering the developments in the Indian market and its importance to CSFB’s overall businesses in the Asia-Pacific region, we are strengthening our onshore presence," said Stephan Stonefield, chairman of CSFB in the pacific region.

Nimesh Kampani of J M financial would retain 51 per cent stake in the fee-based investment banking activities, while offering majority stake of 51 per cent to Morgan Stanley in the fund-based securities trading.

JM Financial will remain the holding company, and the new companies will be known as JM Morgan Stanley Ltd (for investment banking activities) and JM Morgan Stanley Securities Ltd (for securities trading activities). Kampani will be the chairman of both the companies, while Vikram Gandhi, president and country head, Morgan Stanley India, will act as the vice-chairman.

Vikram Gandhi of Morgan Stanley said: “This joint venture is aimed at bringing synergies of both JM Financial and Morgan Stanley together. Despite political uncertainties, we are bullish on India and aim at getting a bigger piece of the expanding investment banking pie in the country. We are extremely excited and don’t have words to express it.”

Refusing to give details of the equity capital of the two new companies Kampani said “the exact details are being thrashed out, and will be in place by April next.”

This joint venture is second for Morgan Stanley in any fast-growing developing countries. Last year, for the first time, Morgan Stanley had picked up a 35 per cent equity stake in a joint venture with a Chinese-State owned entity China Construction Bank. Of the balance, CCB owns 42.5 per cent and three outsiders own 7.5 per cent each in the Chinese investment banking entity.

Through the deal, JM will get international expertise and reach of Morgan Stanley, while the latter will be able to get JM’s most integrated investor network across the country in addition to JM’s extreme closeness to domestic corporates houses and the government.