New Delhi: Bank of America Merrill Lynch, Barclays Plc and JPMorgan Chase and Co. are competing to sell shares for state-run firms in India as the government plans the biggest sell-off in at least five years.
Robert Morrice, Barclays Capital’s Asia-Pacific chairman, plans to double the London-based firm’s investment banking team in India as it vies to sell stock.
JPMorgan hopes for a “slew of disinvestment” by state-run firms, said Kalpana Morparia, the New York-based bank’s chief executive officer in India.
Prime Minister Manmohan Singh’s government pledged to cut holdings in its profitable firms to 90%, accelerating divestments after a five-year slowdown. The Centre may raise Rs25,600 crore from its publicly traded firms, Standard Chartered Bank said, and controls unlisted firms worth $144 billion, according to Morgan Stanley.
“The competition for this business is always extremely fierce,” Kevan Watts, country head for Bank of America (BoA), said in an interview. “It is a big opportunity: we are talking to many people in the government about how we can help with the disinvestment process.”
Indian share sales will add to an IPO rebound in Asia as record-low interest rates and economic stimulus packages fuel a revival in demand for new equities. China Minsheng Banking Corp., Sands China Ltd, Malaysia’s Maxis Bhd and India’s Emaar MGF Land Ltd will lead more than $14 billion of sales in the region.
While government offers are a “prestigious business”, they typically result in lower fees than private sector sales, according to BoA.
BoA ranked seventh in advising on local sales this year, according to Bloomberg data. JPMorgan ranked sixth on domestic share sales, and first in overseas equity offerings by local firms.
Singh, who won re-election in May, had said on Sunday he hopes government sales will accelerate. India netted $11 billion between 1991 and 2008 from asset sales.
India’s benchmark stock index, which had risen every day since the government unveiled the stake sale plan on 5 November, fell 0.4% on Tuesday, limiting its gain for this year to 70%.