Morgan Stanley (NYSE:MS) and JM Financial today announced that they have agreed in principle to separate from their India joint venture. The agreement reflects Morgan Stanley’s confidence in and commitment to the India market, the country’s maturing investment banking landscape and the changing focus of the partners.
Under the terms of the initial agreement, which have yet to be formalized, Morgan Stanley will take full ownership of the joint venture’s institutional equities sales, trading and research platform by acquiring JM Financial’s 49 percent shareholding for US$445 million and sell its 49 stake in the joint venture’s investment banking, fixed income and retail operation to JM Financial for US$20 million. This represents a net consideration of US$425 million.
The restructuring will allow the partners to focus on their own business priorities. Morgan Stanley will expand its wholesale businesses and develop a platform in India that is fully integrated with its global footprint.
Both parties have agreed that all existing mandates will be executed jointly to ensure transactions are completed seamlessly and that the interests of clients are protected.
“We value our decade-long relationship with Nimesh Kampani and admire what he has achieved in helping to develop India’s capital markets,” said Hans Schuettler, Chief Executive Officer, Morgan Stanley Asia. “It is now the right time for Morgan Stanley to develop a wholly-owned full service India platform. Building on the highly successful institutional equities business, and on our existing operations in India, we will create an integrated platform that reflects all the businesses the Firm conducts globally. This investment demonstrates our commitment and confidence in India, the growth of the market and the fast changing needs of our clients.”
Morgan Stanley India will combine the Firm’s existing wholly-owned businesses, including Morgan Stanley Investment Management and Morgan Stanley Real Estate, alongside the institutional equities business. The Firm will build out its investment banking, capital markets, fixed income and private wealth management platforms.
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