Mumbai: Konig and Cie Asia Advisors Pvt. Ltd, an arm of a German investment bank of the same name, has opened for business in India.
If an investment bank opening up a new front for business in the midst of a global financial and economic crisis weren’t an oddity enough, Konig’s primary focus is on shipping—another business that has seen its fortunes plunge over the past year.
Still, Konig isn’t the only investment bank interested in heading to India. In the past six months, two other such banks—DnB NOR Bank ASA from Norway and the world’s largest shipping bank HSH Nordbank—have launched their Indian operations.
Attractive destination: The ABG shipyard in Surat, Gujarat. Overseas banks are looking to help Indian shipping companies raise money easily. Ashesh Shah / Mint
The reason: they believe a shipping boom is on its way to India.
Tobias Konig, the managing partner of Konig and Cie., thinks so. He is convinced that India will be the next China (that country saw a shipping boom in the past few years) in the next few years.
And it isn’t just investment banks focused on shipping that see a boom on the way.
Several overseas classification societies have also jumped on the let’s-sail-to-India bandwagon.
Classification societies such as Korean Register of Shipping and Germanischer Lloyd are the latest to set up shop in India. Such societies certify the safety of vessels—a mandatory requirement.
The Indian Register of Ships is India’s own classification society.
All this bodes well for the Indian shipping business, said a representative of the Indian shipping industry.
“These are positive signals for the Indian maritime industry and shows the focus is shifting towards India. A clutch of investment banks, classification societies, logistics companies and other maritime organization from abroad had come to India in last one year,” said S.S. Kulkarni, secretary general, Indian National Shipowners’ Association, an industry lobby group.
“Perhaps it is only India that is giving hope to global maritime industry when the world is reeling under an economic slowdown. The queuing up of foreign entities (to enter the country) clearly indicates this,” Kulkarni added.
He said Germany’s leading exhibitions company Hamburg Messe und Congress GmbH (HMC) will host a shipping event in India for the first time.
Mint could not immediately contact HMC but according to the company’s website, it is hosting a shipbuilding fair in India, as an offshoot of its renowned SMM fair in Hamburg. “The new international trade fair SMM India will be held for the first time from 12 to 14 November 2009 in Mumbai,” the website reads.
Not everyone is convinced the entry of these banks will help Indian shipping firms raise money easily.
“Indian banks are cash-rich, but are not lending. Therefore anybody who is willing to lend to us is welcome. But I have my reservations on how these representative offices of investment will really help us,” said a senior executive with the state-run Shipping Corp. of India Ltd.
Some overseas shipping banks have plans to float India-specific funds to finance shipping- and port-related activities here.
For instance, Konig’s new initiative, led by investment banker Rajeev Kashikar, wants to invest in Indian shipping companies and ports by raising funds from India and abroad.
“We are ironing out the issues in raising funds inside India. There are Indian and foreign investors interested in investing in India. We will be shortly finalizing the equity and debt structure for the fund that will be floated in India,” said Konig.
If the money is available, this isn’t a bad time for shipping firms to buy ships, a banker said.
“There is huge gap for (in the ability of) Indian shipping companies in acquiring assets. Globally, shipping companies are cancelling their orders, and it is a good chance for Indian companies to acquire assets at a much cheaper price,” said Andrew Chiang, regional head of shipping, logistics and offshore (Asia), DnB Nor.
Konig of Konig and Cie agrees. “Slowdown is the best to acquire assets. But Indian companies are slow in decision making and government process is quite complicated. However, India is the market to watch out for. And we have several investors who wanted to invest in Indian shipping companies.”