Mumbai: The top adviser for Indian share sales last year, Merrill Lynch and Co., said more companies will raise funds privately in 2008 amid the worst start to the year for Indian equity markets in at least three decades.
“Clearly, the public markets are not readily available to everybody today,” Kevan Watts, president of DSP Merrill Lynch Ltd., said in his Mumbai office on Thursday. “It is not impossible to do transactions for some companies now. There will be private opportunities if one wants to pursue.”
The markets 22% slide this year forced companies including Wockhardt Hospitals Ltd and Emaar MGF Land Ltd to scrap stock sales. Global markets have tumbled as the collapse of the US housing market forced banks including Merrill and UBS AG to report $232 billion (Rs9.28 trillion) of writedowns and credit losses.
“There is no reason to suppose that will change pretty rapidly as we get through the credit crisis,” said Watts, 57, who moved from Hong Kong this week to oversee the investment bank’s Indian operations.
“Fundamentals for Indian companies remain strong and the market will come back very quickly when we reach some kind of plateau.”
Indian companies raised a record $26.7 billion last year as the longest economic expansion in six decades and rallying stock market lured investors, according to Bloomberg data.
Merrill advised on $4.5 billion of transactions including DLF Ltd’s record initial public offering and ICICI Bank Ltd’s stock sale.
Merrill, which has slipped to the seventh position in share sales this year, is set to expand by hiring more people to capitalize on opportunities when the market rebounds. “We definitely want to expand,” said Watts. Senior executives, including Sumeet Puri and Vikas Khattar, have left the firm.
Rivals such as CLSA Ltd, Deutsche Bank AG, HSBC Holdings Plc and Citigroup Inc. have also seen exodus of traders and analysts to join local financial services companies such as India Infoline Ltd and Anand Rathi Securities Ltd.
“Talent is a serious constraint,” Watts said.