Mumbai: The UK will welcome Indian companies wishing to list on the London Stock Exchange, according to Nick Anstee, Lord Mayor of the City of London. In an interview on Friday, he said he doesn’t see the importance of London as an international financial centre diminishing despite competition from rival cities.
A cricket lover, Anstee followed the recent Test series between India and Australia, which India won, to gauge the English team’s chances against Australia in the upcoming Ashes series. Edited excerpts:
Have you been to Mumbai before?
This is the first time I have been to India, I am afraid to say, I am almost ashamed to say. I had a full day, I met (officials at) Sebi (Securities and Exchange Board of India), I met two governors of the RBI (Reserve Bank of India), I have had a whole series of bilateral conversations with the businessmen here as well.
What were the points of discussion?
We are looking at the FII (foreign institutional investor) positions and the limitations... We are looking at banks and their operations and subsidiarizations and how they will probably be dealt equally with national banks (in India)... whether they will also be given an opportunity to expand their branch network in order to grow the economy in the rural areas. They are already doing this in some centres with microfinance projects, but they want to do more.
How important is India in your scheme of things?
Well, I think the (UK) prime minister (David Cameron) and chancellor of the exchequer (George Osborne) coming across to India in the first 10 weeks is actually a very clear message, I would hope. Lord Sassoon is the treasury spokesman, he is the financial services spokesman in the House of Lords, and I am now following on James Sassoon’s visit some eight weeks later. So India is undoubtedly important.
‘Two economies, one future’ is how we take the partnership with India. We believe that we (have) got a lot to share with you. You already have a considerable investment in the United Kingdom. (Tata group chairman) Ratan Tata has invested into one of the classic marks when it comes to automobiles and we are also looking at Essar Energy that listed in May and met with great success. So India is a huge opportunity. We are here to help build your economy, particularly in the area of infrastructure because in order to achieve the aspirations of spending over $1 trillion (Rs 44.5 trillion) in infrastructure in the near term, you have to tap into the international capital market.
What sort of collaboration can we see from the UK on that? Will your companies be interested in buying Indian bonds? How will they invest here?
The financial community in London has 250 foreign banks, which is more than Frankfurt, Paris and New York combined. It has people and capital. We have many British bankers here (in India). Investment bankers come here regularly. We are here to meet that challenge.
You are hosting the Olympics. We understand that the private participation is much more than the government participation. Any scope for Indian companies to go and take part in the investment activities there?
You obviously have to look into where we are in the Olympics timetable. The preparations for the Games is almost complete, it will be complete by next year. So that will be one year ahead of the Games... I know there was a bidding process and I am sure the Indian companies have participated in them... And we welcomed them. One thing is that as a country we are very open. We have no problem on international companies taking over UK-based businesses. Although there is a debate on the subject in the light of what happened in Cadbury and Kraft. (Kraft Foods Inc. has acquired Cadbury Plc.) But we are very open. About 80% of all the investments made by Chinese are made through the United Kingdom to Europe.
You mentioned Cadbury… it is now foreign-owned. How have your countrymen taken it?
There is a debate going on about what and how we should learn the lesson from the Cadbury takeover. Once you are listed on the public market in the UK and you want to acquire 50% of the shares, you can end up controlling it. There are rules of governance and a takeover code that explicitly say what you can or cannot do. Most companies come in looking to gain up to 100%. They don’t want to have the residual shareholders to deal with, and they want to delist the business so they can merge it into their other activities... We don’t have a problem in that. There is a debate and, of course, there will always be concerns which are expressed by unions on what might happen in terms of closures of plants. For example what might happen even today of Indians going across to the United Kingdom, buying businesses and actually transporting the labour content back to India? That’s life...
A lot of steel, metal and mining companies are listed on LSE. Most of Tata Steel’s revenue comes from Europe. Do you think it’s time that Tata Steel Ltd (which bought Corus Group Plc) and Tata Motors Ltd (which acquired Jaguar-Land Rover) should list on LSE?
It’s for them to decide. I can’t prejudge what requirements it would serve. But to businesses, we welcome anyone wanting to list on the LSE. It is a very open, transparent market. It has got a deep capital pool. It has got deep and significant liquidity. Global fund managers are based in the UK, second behind New York. New York again is far more focused on their domestic market. We would welcome Tata listing businesses in London but that is of course for the management to decide.
You have recently taken Ratan Tata onto your advisory board. What message do you want to convey?
It is a part and parcel of building a partnership and building a relationship. As I said, I am here to continue the ‘two economies, one future’ concept that was introduced by the prime minister when he was across here in July. We want to understand from those who operate in the local market what the opportunity is for UK businesses over here and by talking to people who understand the markets here incredibly well.
Liquor, steel, car, now football clubs … Indians are going to your country and acquiring very prestigious brands. How do you view Indian investors, Indian management, their attitude vis-a-vis other investors such as those from West Asia, Russia or China?
I met three people today who are running their Indian businesses and also UK acquisitions. How do I view them? I am going to say that it’s a huge confidence you have over here. Look at Essar Energy Plc, you look at the management team, what they have achieved with their business. Doesn’t it speak volumes about the ability of the Indian management?
Are you facing any cultural change because of takeovers? Are the workers and management gelling well?
Most British businesses, when they get taken over by whoever, get on with life as it was before and that is the environment in which they have to work. Clearly it may be that you will find that in Chinese businesses they like to put a Chinese man at the top, but he will have a board sitting with him. What he will be doing he will be mindful of. It will be very foolish if he is not mindful of (that).
That goes for any international businessman. The local cultural issues…I think it will be absolute folly if somebody comes from the United Kingdom to acquire a business in India and tries to impose his management team with no local presence on it. There’s a great line ‘in local for local’. Unless you get to know the market, unless you know the network, perhaps you are losing some serious value in your business.
A lot of financial centres are coming up around the world. Do you think the importance of London as the quintessential financial services centre is going to diminish?
No, I don’t. Why, because it is the truly international financial centre. It is a centre which has got a cluster of banks—250 foreign banks and more. And that’s just one component of the financial services operations. London is a huge cluster employing 400,000 people. People want to live in London, people want to work in London. Yes, other centres will grow in stature, but you have to look at what are the qualities expected of in order to be truly international.
First and foremost is that you have to be able to tap into the global pool of talent, which means you want an environment where not only they but (also) their families are capable of living in. You have got to look at the rule of law where any dispute between local and overseas investors stands an equal chance in the court system which is independent of political influence and you have also got to look into what the politics of different countries are in terms of what provides stability and confidence in investing. You can draw your own conclusion from these comments...I am not making any particular comment against any country, but that’s what is required to set up a platform. Sometimes, some centres are competitors to London; yes, sure enough.
There is growth in China. There is growth here as well. Shanghai, Hong Kong and Singapore will be strong, but London will remain in its position. Although I always make the point that in many ways it’s for us to lose, it depends on how we approach domestically fiscal policy which may impact the desirability of staying in London. That is a debate that is currently taking place... We are doing our utmost to ensure the government recognizes the importance of industry, which I believe it does. London is positioned as the financial services centre of the world and we don’t want to lose it through folly of the fiscal policies which impact negatively against the individuals and institutions. We are proud of the fact that we have the best, and strongest regulatory regime, and that creates that arbitrage with other centres. We don’t need that to happen. What we want is G20 (Group of 20 nations) to come up with rules that everyone abides by that says there is no place to hide for financial services industries when it comes to regulation.
As far as India is concerned, it will come up when its time will come. It has got critical mass, it has got the time zone, it has got the culture, it has got the rule of law. It doesn’t have exchange control. Cross-border capital flow is not an issue emanating out of India.
You are a cricket fan. Did you follow the recent India-Australia series?
Yes, I did. Reason for that is what is going to happen beyond that particular series. To see how England might fare. There is a totally confident air about the (English) team that they can get results.