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Morgan Stanley leads in investment banking: Study

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"India has reached critical mass in M&A. And, while international companies are focusing on consolidation of their existing business base in India, it is Indian companies that are expanding, rationalising and restructuring, all of which are healthy signs for the future of M&A industry."

MUMBAI, April 10

JM Morgan Stanley dominated the Indian investment-banking scene in 2001 followed by DSP Merrill Lynch and Kotak Mahindra, according to a study released by India Advisory Partners, an independent investment banking advisory company.

JM Morgan Stanley (JMMS) has topped the charts for the third consecutive year, handling total business of Rs 19,091.63 crore including public, rights and international issues as well as mergers and acquisitions (M&As). Of this, the total value of M&A deals handled by JMMS was Rs 11,400 crore.

DSP Merrill Lynch comes in second at Rs 14,751.73 crore worth of business handled with Rs 6,260 crore worth of M&A deals. DSP is followed by Kotak Mahindra, handling business worth Rs 7,172.81 crore of which the size of M&A deals amounted to Rs 1,750 crore.

On the general M&A scenario, the study says, Indian markets have put up a steady performance in a difficult global market.

According to the study, there has been a 30 per cent drop in total deal values in 2001 at Rs 30,200 crore compared to 2000 from approximately half the number of deals.

The striking feature of the second half of 2001 was the virtual closing down of private equity deal market, which saw less than Rs 100 crore transactions during that period, resulting in as much private equity activity as seen in 1999 but close to five times less activity than in 2000.

In contrast, M&A volumes held up well, with an overall fall of 19 per cent compared to 2000 and an activity level that was still 50 per cent higher than the M&A deal values of 1999.

The average deal size, as per the study, continued to grow with 12 deals over the Rs 500-crore mark compared to 8 in 1999 and 19 in 2000. As in 2000, this level of activity is being sustained by Indian companies, whose share of total transactions rose once again from 54 per cent to 65 per cent of all deals against only 37 per cent in 1998.

The role of international acquirers has meanwhile declined from 46 per cent in 2000 to 35 per cent in 2001.

"India has reached critical mass in M&A. And, while international companies are focusing on consolidation of their existing business base in India, it is Indian companies that are expanding, rationalising and restructuring, all of which are healthy signs for future M&A industry,'' said Mr James Winterbotham of India Advisory Partners.

In a sector-based segmentation, deals in the telecom sector comprised 24 per cent of the total deals in 2001 as against 20 in 2000.

The striking feature of 2001, particularly the second half, has been the growth in the number and value of financial services deals which accounted for 22 per cent of all deals compared to three per cent in 2000.

Reflecting the worldwide collapse, Indian IT sector deals constituted only nine per cent of the total deals in 2001 compared to 20 per cent in 2000.

This year also saw the highest level of privatisation deals worth a total of Rs 3,700 crore, the study said.

These deals include the sale of 51 per cent in Bharat Aluminum Company to Sterlite, sale of 51 per cent in CMC to Tata Sons and sale of six hotels belonging to the Government owned ITC.

Going forward, India Advisory Partners projects a robust outlook for the Indian M&A market in 2002 - with expected areas of activity including telecom and financial services sectors coupled with increase in privatisation and de-listing of foreign subsidiaries.

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