Rabo India gets merchant banking licence

Rabo India Securities Pvt Ltd, a 100 per cent subsidiary of Rabo India Finance, has received a Category 1 merchant banking licence from the Securities and Exchange Board of India (Sebi).

The merchant banking arm will kickstart operations with an initial capital of Rs 5.5 crore.

Rabo India Securities proposes to offer the entire gamut of investment banking products including advice on transactions in terms of capital structure to maximisation of client shareholder value as well as defense against takeovers.

Rabo India Securities will also be able to execute open offers on behalf of clients and participate in the capital raising exercise as a consequence.

The merchant banking industry is very vast with a number of credible players in the market, where growth is competitive, and it would not be easy for Rabo India Securities to establish itself, said Sanjiv Bhasin, managing director and chief executive office, Rabo India Finance.

However, he told Business Standard the merchant banking subsidiary "would have an edge in terms of its focus areas, where our canvas will be unlimited."

Rabo India Finance is the Indian subsidiary of Rabobank Nederlands, providing innovative corporate and investment banking product solutions in India. Its focus areas include food and agriculture, telecom, life sciences and non-conventional forms of energy among other areas.

In the food and agriculture industry, Bhasin expects renewed investment in areas of farm management and retail outlets, which would bring about consolidation and fresh capital.

Similarly there has been large scale activity in life sciences and biotechnology in terms of acquisition and rationalisation, which too would call for merchant banking expertise.

"With a lot of investment coming into the life sciences and biotechnology segment through private equity, there would be a need for IPOs," said Bhasin.

With firm plans in place, RIS aims to introduce a holistic offering covering tender offer management, acquisition support and public offering management.

RIS also plans to augment its superior research support base to expand enhanced services such as underwriting of securities (including debt, equity and brokerage) in addition to introducing the various investment banking products such as M&A, IPOs and Bond offerings.

Establishing the merchant banking arm is part of Rabo India's expansion plan and reiteration of its commitment to the Indian market.

Bhasin said: "Obtaining this license enhances our ability to provide a comprehensive customised range of products and services to prospective and existing wholesale clients." The subsidiary proposes to leverage the parent company's expertise and local presence.

Fergus Murphy, head of Asia region for Rabobank International, added in a statement that the Indian subsidiary has set admirable benchmarks for the Rabobank International franchise in Asia-Pacific and this latest development allows for it to execute the strong vision towards a well-placed and increasingly competitive financial services franchise in India.

"Coupling Rabobank's global merchant banking expertise to enhance value to our demanding clients is a clear benefit of acquiring this licence," said Murphy.