Credit Suisse Group, which already advises and provides finance to major Indian companies, will now play in India’s booming brokerage business, joining global rivals such as Goldman Sachs Group Inc. and Lehman Brothers Inc., which are also going after the financial services market in the country.
“We see the medium- to long-term growth potential as very significant,” said Paul Calello, chief executive officer of the Asia Pacific region for Credit Suisse.
Calello noted that India was responsible for 14-15% of Asia’s (excluding Japan) new equity issuances in 2006 and said the group expects 10% growth in India’s gross domestic product for 2007-08. As a result, he said, “we will continue to expand our offices here”.
Credit Suisse, Goldman and Lehman entered India about one year ago with small teams housed in temporary offices and five-star hotel suites. Since then, they have added to their ranks mostly by poaching from other banks.
The investment-banking services provided them with their foothold in India, and from there, they have looked to slowly expand their presence into sales and broking, as well as underwriting, asset management and private-client services.
As it moves along this path, Credit Suisse has grown out of its 1,000sq. ft office at Free Press House at Mumbai’s commercial district, Nariman Point, and is gradually filling up 20,000sq. ft in Worli’s Ceejay House, sharing the new building with Barclays and Societe Generale.
Mihir Doshi, country head for India, said the firm has appointed the heads of its three main arms. They are V. Anantharaman from Standard Chartered Bank to head investment banking with a seven-person team; Nilesh Jasani from Credit Suisse’s Taipei office to head research with a 10-person team; and Rajat Sabharwal from Kotak to head equity sales also with a 10-person team.
Calello said Credit Suisse is now in sales and execution, offshore investment banking, financing, advisory services, and offshore listing and will look to get into domestic underwriting, along with asset management and private banking. Doshi added that they have also made private-equity investments in the realestate market.
Credit Suisse’s plans come almost five years after the company lost its broking licence in India because it violated securities rules in trading shares of DSQ Biotech Ltd between 1999 and 2001. The Indian government decided late last year not to impose additional penalties. As a result, said Doshi, “we’re back”. Credit Suisse now has a brokerage licence and has applied for one in investment banking, too.
Goldman Sachs secured its investment banking and brokerage licence in late 2006 and conducted its first secondary-market transaction in Indian stock exchanges in January. The bank has built up a team of 60 in research, investment banking and business after parting with Kotak Securities Ltd, a domestic brokerage.
Goldman Sachs is active in private equity, where it does not require any licence from the government. Its prominent investment in this space is the 5% stake that it has picked up in the National Stock Exchange for $115 million and 7% stake in the National Commodity and Derivatives Exchange for $23.1 million.
While these deals are more strategic and long-term in nature, Goldman’s private-banking arm is looking at more investments in top-tier Indian companies.
Similarly, Lehman Brothers is furiously recruiting out of its Worli office to build a larger team. To lead the charge, it pulled Surojit Shome from his position at the helm of Citigroup’s corporate banking arm.
Credit Suisse will hold an Asia investor conference next week at which finance minister P. Chidambaram and Wipro’s Azim Premji are slated to speak.
(Biju Mathew contributed to this story.)