Hsbc Seeks Fipb Nod For New Alliance

HSBC Investment Bank Holdings BV has put up a fresh proposal before the Foreign Investment Promotion Board (FIPB) to seek approval for the fresh alliance with its new investors.

While HSBC B&K officials are tight-lipped about who their partner will be in the new venture, a fresh approval is essential to put the new venture in place. Sources say that HSBC Investment Bank Holdings has paid a specified amount to the Morarkas for their stake in the company.

There are two parts in which the payment will be made to the Morarkas. HSBC has paid them the shareholding partnership termination money. This is according to the contract we had with them, a source at HSBC B&K said.

Under the existing guidelines for foreign investment in financial services, HSBC cannot hold 100 per cent stake in the stockbroking venture. It can hold only 75 per cent stake in the venture.

HSBC has clarified that technically, Morarkas continue to hold shares of HSBC B&K.

The money for the value of these shares will be paid to them by our new shareholders. It is just that the money paid for the termination of shareholding agreement could be higher than the actual value of shares, the source added.

The new partners are expected to get a fixed rate of return on their investment along with a call option. The new arrangement is expected to give HSBC full control of the stockbroking venture.

While no final view has been taken on the issue, HSBC B&K sources say that they would continue to seek local expertise through their new alliance.

We would certainly need local expertise for distribution in India. The previous venture has been useful in the light of access that it gave in the India market, the source added.