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Merrill
eyes India's rising wealth pool
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Leading
wealth management firm Merrill Lynch
is betting on fast growing economies
in the Asia Pacific, India in particular,
to bolster its flagging fortunes back
home. "The Asia Pacific region, particularly
India, is one of the most attractive
places for us to grow our business,"
said John Thain, chairman and chief
executive officer Merrill Lynch, at
a press briefing here. "There is a
lot of wealth being created in India
and we would like to manage that for
those creating it," Mr Thain said.
The former NYSE Euronext CEO got into
the hot seat at Merrill Lynch in November
last year, replacing Stanley O'Neal,
who had been forced to resign after
subprime assets-related write down
led to Merrill's highest ever quarterly
loss. Mr Thain sees arranging capital
for companies looking to go public,
infrastructure financing and cross-border
mergers and acquisitions as the key
areas of opportunity for Merrill in
India. Merrill Lynch has doubled its
head count in India over the last
couple of years, while revenues have
grown four times in the last two and
a half years. The New York headquartered
firm manages roughly $1.8 trillion
worth of its clients funds, but has
been facing testing times because
of the ongoing crisis in the credit
markets. Along with other leading
global banks, Merrill too has suffered
bruising writedowns on some of its
dealings in subprime assets. While
the firm is looking to cut about 4,000
jobs - much of it in the US - Mr Thain
pointed out that the company would
not be restricting growth or investment
opportunities in fast growing markets.
"Our headcount in India will continue
to rise," he said.
Mr
Thain said Merrill Lynch has been
active both in the traditional form
of private equity investments as well
as private equity investments in areas
like commercial real estate in India
and other rapidly expanding economies
of the world. "The reason you don't
hear about them is because they are
done on our own balance sheet. One
of the things we are now looking at
is a third party fund format. We recently
completed the first closing of a Asia
Pacific real estate fund, which mobilised
close to $2.5 billion," he said. He
expects the US economy to struggle
for the next 6-12 months because of
a combination of falling home prices,
rising energy costs and job cuts.
Mr Thain does not believe in the theory
of decoupling, but is of the view
that India will be less affected by
a slowdown in the US. "Because of
strong domestic demand that continues
to grow, its companies expanding globally,
and continuing investment in infrastructure,
India will be more immune to a slowdown
in the US," he said. There is persistent
speculation that Merrill may have
go in for another round of capital
raising soon. But Mr Thains avers
that is not the case. During the first
quarter of this year, Merrill's level
3 assets - those hard to price in
the markets - rose 69%, stoking concerns
that more writedowns could be in the
offing. The company has written down
roughly $30 billion under Mr Thain's
captaincy so far. "I think we are
in the process of fixing the problems
and have made good progress; we have
fixed most of them," Mr Thain said
when asked how long it would take
him to stanch the subprime triggered
haemorrhage at Merrill. He said the
company's equity capital was about
$44 billion, just a little short of
its record high. The firm's liquidity
position at the end of the first quarter
was $82 billion, a record high. "So
we have fixed our capital and liquidity
issues," Mr Thain said. "We have added
to the risk management team; they
now report directly to me. We have
significantly reduced the risk profile
of our trading desk. We have added
more senior personnel in our organisation
and changed the compensation philosophy,"
he outlined the other measures. "I
am now optimistic that we can now
pretty much focus on our clients and
our business," Mr Thain concluded.
Courtesy:
www.economictimes.indiatimes.com,
May 08, 2008
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India
is one of the most attractive places
for investments: Merrill Lynch
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Mumbai,
May 7 India is one of the most attractive
places for investments, in relation
to the rest of the world, said Mr
John Thain, Chairman & CEO of Merrill
Lynch, at a news briefing here on
Wednesday. India will be relatively
less affected by the US slowdown,
said Mr Thain, who does not believe
in the decoupling theory. "The degree
is different for different countries,
depending on the domestic demand.
And in India, there is a very high
level of domestic demand, while there
are large investments happening in
infrastructure," he said.
Massive
write-downs
The US economy will continue to drag
for at least four to six months, as
rising energy prices and unemployment
lead to a pull back on the part of
the US customers, said Mr Thain. His
bank had made massive write-downs
relating to the US sub-prime mortgage
crisis and had cut 4,000 jobs in the
US. The financial institutions in
the US have written off $300 billion
in losses in the sub prime crisis,
but going forward, one is not likely
to see losses anywhere near to this.
But those banks with exposure to consumer
credit are likely to report more write
offs, he said. The bank has doubled
its headcount in India over the last
two years at investment banking and
brokerage DSP Merrill Lynch, in which
it owns a 90 per cent stake, he said.
Here, the bank is focussed on high
networth individuals, through its
wealth management business, and sees
opportunity in advising the growing
domestic businesses, which were looking
outward, he said. While it has been
active in private equity and real
estate investments in India, doing
it on its own balance sheet, Merrill
Lynch was moving to a third party
format, and had recently made a first
closing of an Asia Pacific real estate
fund, in which its contribution was
over $700 million. It was also in
the process of raising money for a
traditional private equity fund in
the region, he said.
Courtesy:
www.thehindubusinessline.com, May
08, 2008
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India
to become 8th wealthiest place by
2017: Barclays
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India
with its increasing number of millionaires
is projected to be in the 8th position
among the world's top 10 wealth centres
by 2017, says a report by banking
giant Barclays. The report further
says that emerging markets like India,
China and Russia are fast catching
up with the rich countries in terms
of their wealth. "Over the coming
decade, the gap in wealth between
the world's most developed countries
and the leading emerging markets will
continue to narrow with many new millionaires
being created in India, China, Russia
and other countries which are undergoing
rapid development," says Barclays
Wealth Report. Moreover, by 2017 the
four emerging markets-- India, China,
Brazil and Russia-- will have so many
millionaires that it would be inappropriate
to call them emerging markets, Barclays
added. The second fastest growing
economy India is expected to join
the league of top 10 wealth centres
by 2017 by that time its neighbour
China is likely to move up to third
rank from its present seventh place.
While Russia could experience considerable
growth, moving to 11th place from
19th, Brazil will also move up the
ladder to 12th from 15th. The report
says a sudden spurt in the wealth
of emerging markets has displaced
more developed economies such as Australia,
South Korea and Portugal from the
list. Australia's ranking fell from
10th to 16th, while South Korea dipped
to 12th from 15th and Portugal came
down to 34th from 25th. In 2007, G7
countries -- Canada, France, Germany,
Italy, Japan, the UK and the US --
contained more than one million millionaire
households.
Courtesy:
www.indianexpress.com, May 07, 2008
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Gujarat
emerging as export hub for auto majors
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Gujarat
is poised to become a major auto export
hub in the country with several vehicle
manufacturers coming to the state
to invest in its ports to set up automobile-handling
terminals. The Mundra port, developed
by the Mundra Port and Special Economic
Zone (MPSEZ), will have a car export
terminal operational by the first
quarter of 2009, a top official of
the company, who spoke on condition
of anonymity, told IANS. The terminal,
exclusively for Maruti Suzuki India
cars, is being built at an investment
of Rs.1 billion ($25 million), said
Sandeep Mehta, chief executive of
the port. This will be India's first
dedicated car export terminal, he
added. The terminal will be able to
handle 250,000 units of Maruti cars
a year. The capacity would be raised
by an additional 400,000 units by
2010, Mehta said. According to officials,
Maruti Suzuki currently exports close
to 40,000 cars from India and is keen
on increasing exports five-fold to
200,000 in two years. A bulk of it
will be handled through Mundra.
Courtesy:
www.indiaenews.com, May 03, 2008
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