Macquarie Bank is jumping aboard the Indian equities gravy train by opening a securities brokerage business in Mumbai to focus on equity capital markets, convertible notes, M&A advisory and specialist funds management.
The move requires regulatory approval, but Macquarie has already named three key executives to run the operation. Stuart Smythe has relocated from the bank’s New York office to be head of equities in India, while Sarosh Irani has joined as chief operating officer and Jal Irani has been appointed head of research for the country.
Roy Laidlaw, head of Macquarie Securities, says the plan is to have 40 staff working from Mumbai soon. "We've identified a number of high-calibre corporate finance professionals to establish the business," he says.
He adds that other groups from the bank, including the financial services group and banking and property group, have also been exploring opportunities in India.
The bank's Asian head of corporate finance, Andrew Low, says: "The Indian market offers particular opportunities in sectors such as infrastructure, resources, real estate, and media and technology, in which we have particular strength."
Macquarie's move comes a week after news that Goldman Sachs plans to increase its stake in two Indian joint ventures, Kotak Mahindra Capital and Kotak Securities.
Foreign investment banks are keen to get a foothold in one of the most important equity markets in Asia. In 2004, Indian companies raised $10 billion through the equity markets, more than the whole of the previous nine years combined. A similar pattern has unfolded in 2005, with more deals from India during the first five months of the year than China.
Macquarie Bank has been pursuing an aggressive expansion strategy in Asia for some months now. Just this week, it and a syndicate of institutional investors acquired a portfolio of nine retail shopping malls in China, with Macquarie contributing $38 million of senior debt and $55 million of equity to the purchase.
In April, Laidlaw's group formed a joint venture with Thai Military Bank to provide investment banking services in Thailand. And in March, the bank was one of five firms given approval to establish a foreign stock broking company in Malaysia. Since March it has also built corporate finance operations in Indonesia and Taiwan.
The bank now employs 850 staff in Asia. It has 90 sales people selling Asia-Pacific stocks and 60 analysts covering over 500 stocks in the region.