2007: Incredible India

IFR Asia - 20th Anniversary Special Issue 2017
3 min read
S Anuradha

India’s JM Financial ended its nine-year joint venture with Morgan Stanley in 2007, dissolving the last of the JVs with the bulge-bracket investment banks and ushering in a new chapter for the local market.

Started in 1973, JM Financial was already a prominent player in the local investment banking world when it teamed up with Morgan Stanley in 1999. India’s securities industry, however, was in its infancy: the Sensex was at 4,000 – compared to 31,000 today – and the first IPO to be priced through bookbuilding only came in 1999, in the shape of Hughes Software’s Rs2.76bn (US$43m) float.

The JM Morgan Stanley partnership – together with DSP Merrill Lynch and Kotak Mahindra’s JV with Goldman Sachs – came to dominate the local investment banking market.

Among the more notable deals, JM Morgan Stanley worked on the Rs9.9bn Maruti Suzuki IPO which kickstarted a bull run in 2003.

“The efforts of the then Disinvestment Minister Arun Shourie, the company’s managing director Jagdish Khattar, bureaucrat PK Basu and the bankers paid off. Sold at Rs125 the share price has appreciated 58 times,” said Atul Mehra, managing director and co-CEO of investment banking at JM Financial.

JM also won a lead role on the Rs54bn IPO of Tata Consultancy Services in 2004, the first listing from the Tata group in 10 years and a deal Mehra remembers as “a dream come true”.

“It was a very balanced, reasonably priced and allocated issue,” Mehra said.

ICICI Bank’s Rs80bn issue of domestic shares and American depository shares in 2005 was another first, before Tata Motors introduce differential voting shares in a Rs41bn offering in November 2008. Housing Development Finance Corp stapled together convertible warrants and non-convertible debentures in 2009 and Standard Chartered launched the first Indian depository receipt in 2010, raising Rs25bn.

Mehra believes the quality of the market has improved dramatically over the past two decades. India has come a long way from the days when the government’s Controller of Capital Issues would determine the size and the price of a share issue, to a time where the issuer is free to sell as many shares as it likes at market-determined prices.

While it used to take at least 60 days to complete an IPO from launch to listing earlier, now it takes just a fortnight.

“The last 20 years have been particularly remarkable with positive changes happening on multiple fronts. It felt really exciting to witness these changes from a close range,” said Mehra.

JM has continued to focus on the entire investment banking business since its split with Morgan Stanley, helping it weather temporary lulls in equity issuance and rejuvenated international competition.

“Our core competencies have helped us survive the onslaught of both domestic and foreign competition over the years,” said Mehra.