MUMBAI: It’s not yet official, but it’s definitely on. Raymond James, the New York Stock Exchange-listed financial services company, is exiting its joint venture (JV) in India with ASK Investment and Financial Consultants.
“You can expect an announcement in the next 10 days,” said a company official, refusing to divulge details on the how much Raymond James would pay the Koticha brothers of ASK for the 50% stake the former hold in the 12-year JV, ASK Raymond James.
The recent past has seen many long-standing domestic-foreign partnerships in the investment banking and stockbroking business falling apart, with the foreigners wanting to go it alone, rather than piggybacking on their domestic partners. The opening up of the financial services sector, clearer guidelines on how foreign entities operating in this sector are governed, and unwillingness to share the spoils of a great emerging story like India, have been cited as reasons. Merrill Lynch set the precedent in late 2005, when it bought out Hemendra Kothari’s 50% stake in DSP Merrill Lynch for $500 million.
In March, 2006, Goldman Sachs broke off its 10-year joint venture with Kotak Mahindra Bank’s subsidiaries in the investment banking and stock broking space. Kotak had bought out the 25% held by Goldman in Kotak Mahindra Capital Company (investment banking arm) for Rs 210 crore and a similar stake held in Kotak Securities (institutional and retail broking arm) for Rs 123 crore. Goldman has since set up shop in India on its own.
More recently (in February 2007), Morgan Stanley got out of its eight-year joint venture JM Financial. JM Financial bought out Morgan Stanley’s 49% stake in the investment banking subsidiary for $20 million (Rs 88.5 crore) and in turn, sold its 49% holding in the institutional equity broking arm of the JV to Morgan Stanley for $445 million (Rs 1,970 crore).
