Abn-Amro Seeks Nod To Pick 75% In H G India

ABN-Amro has applied to the Foreign Investment Promotion Board (FIPB) to pick up a 75 per cent stake in the brokerage outfit, ABN Amro Asia Equities (India), formerly known as Hoare Govvett India Securities. IL & FS will hold the minority 25 per cent stake in the new set-up.

Officials at the investment bank confirmed the development, stating that the clearance is awaited following which a sum of $6.6 million will be infused into the company.

The H G India Securities name will now cease to exist and the new investment bank of the bank will be called ABN Amro Asia Equities (India), with Richard Bailey as the chief executive.

 

The new firm, besides strengthening its brokerage operations, will move into corporate finance activities in the coming years, sources said.

ABN Amro Asia Equities is amongst the few FII securities firms which are consolidating their positions in India at a time when other investment banks/FII brokerages are either changing their focus from equities to debt markets or simply downsizing operations across regional markets following the recent meltdown in the Asian markets.

IL & FS, which is the joint partner in the original outfit of H G India, will continue to have a presence in the tie-up. The investment bank already has a staff of 20, having pulled in key personnel from other FII brokerages/investment banks like Natwest Markets and W I Carr.

The head of research in the ABN Amro Asia firm is Devesh Kumar, formerly with W I Carr Securities. The staff includes 9 in the equities research department and another five in the sales and dealing section.

Speaking to Business Standard, Richard Bailey, CE of ABN Amro Asia Equities (India) said: We had not done justice in earlier years to the Indian operations. It is the right time to gear up our presence''.

The number of brokerage outfits (in terms of number of brokerage seats at exchanges) of ABN Amro across the Asian and Australasian markets is amongst the highest. The firm has one brokerage seat each at the Bombay Stock Exchange and the National Stock Exchange.

Kumar said ABN Amro Asia Equities has now turned overweight on the Indian markets, according to their latest study. The research study in September-December 1997 had placed India as underweight. We now, however, feel that there are some stocks/sectors whose valuations appear attractive at these levels, Kumar said.

The sectors on which the firm is bullish are capital goods, metals and cements. A recovery at the markets would, however, be seen only after October this year and the defensive sector stocks in pharmaceuticals and FMCG and oil/gas sectors would be safer bets at this stage, he added.