NEW DELHI, Dec 9: Global investment bank Merrill Lynch plans to pay $500 million to hike its stake in its Indian joint venture to 90 per cent to expand operations in India’s fast-growing financial services sector, a statement said.
Merrill Lynch’s move announced late on Thursday to raise its holding in Mumbai-based DSP Merrill Lynch to 90 per cent from 40 per cent was believed to mark the largest foreign direct investment yet in India’s financial services sector.
“As a result of this change we will be able to accelerate our plans for growth in this robust market,” Merrill Lynch chairman Stan O’Neal said in a company web site statement.
The announcement of the deal comes as India’s stock market is booming and its economy is forecast to grow by at least 7.5 per cent this year, making it the second fastest expanding major economy in the world after China’s.
“The increased ownership by Merrill Lynch will enable the firm to continue to build its important presence as one of the leading securities firms in India,” the statement said.
DSP Merrill Lynch Ltd (DSPML) is one of India’s top investment banking and wealth management companies. The deal values DSP Merrill Lynch at one billion dollars, according to media reports.
Kothari will continue as chairman of DSP Merrill Lynch which will retain the same name after the agreement goes into effect.
The deal is expected to close in the first half of 2006, subject to various regulatory approvals, the statement said.
Merrill Lynch is buying a 47.73 per cent stake held by its joint venture Indian partner Hemendra Kothari, Business Standard reported. It will acquire the remaining 2.27pc from retail shareholders and de-list the company from the stock markets.
The newspaper said Kothari would retain a 10 per cent stake.
“Merrill Lunch wants to increase investments in India as the future is here,” Kevin Watts, chairman of Merrill Lynch International, said.
Seeking to take advantage of the opening up of India’s economy that began in the early 1990s, Merrill took an initial 26pc stake in DSPML in 1995, later raising its holding to 40 per cent.—AFP
