“We are thinking of a foreign partner but haven't finalised anyone,” S Muhnot, managing director of IDBI Capital Market Services, said in an interview on Monday.
Mumbai-based IDBI Capital is seeking foreign partners to help boost revenue after its government debt underwriting business was turned into a new company in accordance with central bank rules. The broking house also wants to benefit from record overseas investment in the nation's $854 billion economy that's persuading brokerages such as Motilal Oswal Financial Services Ltd to sell shares to expand business.
Overseas funds have bought a net $9.73 billion of stocks and $234.8 million of bonds this year, totaling a record $9.97 billion. That surpassed the net $8.87 billion in stocks and bonds bought in 2006 and $9.46 billion in 2005.
“Financial service companies are trying to capitalise on the attraction of the stock market, as rising salaries are allowing people to invest in all asset classes, including equity,” Darpin Shah, an analyst with Dolat Capital Market Ltd, said in an interview in Mumbai.
India's benchmark Sensitive index has risen 9% this year after rising about 47% last year. The index touched a record 15,794.92 on July 24.
IDBI Capital also plans to enter the private equity business by investing as much as Rs 150 crore ($37 million) in companies that have been operational for a few years.
“We expect to exit in three years after our initial investment in companies,” Muhnot said. IDBI Capital may later support its parent's endeavour to start a venture fund, he said.
The unit of Industrial Development Bank, a former lender to companies which turned itself into a commercial bank by acquiring its unit in 2005, will begin offering portfolio management services, or advise clients and manage investments, starting this month.
It will advise companies or institutions with funds of more than Rs 5 crore, Muhnot said.