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DSP set to buy out Merrill

BS Markets Bureau

DSP Merrill Lynch -- the 60:40 joint venture between Hemendra Kothari and Associates and US-based investment bank Merrill Lynch -- is restructuring its operations.

Close on the heels of DSP Merrill decision to delist itself from the bourses, it has initiated discussions with Merrill to buyout the latter's 40 per cent stake in DSP Merrill Lynch Investment Managers, the joint venture asset management company.

It may be recalled that about three years back, the third group company, DSP Merrill Securities, was merged with DSP Merrill.

According to sources, it may take few months to finalise the deal. "Talks have started but no decision has yet been taken on pricing of the stake," sources in the know of the development said.

The rationale behind the move, sources said, is to localise decision making so that it can become more competitive in the Indian market.

The perception is that due to DSP Merrill's centralised operations --- handled from Singapore -- the company recently lost its position among the top 10 asset managers in India.

A DSP Merrill release, quoting Hemendra Kothari, chairman of DSP Merrill, said: "We believe that we can better tap the significant asset management growth opportunity in India, and we intend giving the business a fresh thrust."

Check Low, co-chairman of Merrill Lynch (Asia-Pacific Region), said the partners "would also facilitate the expansion of the domestic asset-management unit".

He also reiterated Merrill's "strong commitment" to India which is a key long-term market for the global investment bank.

DSP Merrill Lynch Investment Managers manages seven schemes in India. They are DSP Merrill Lynch Equity Fund, DSP Merrill Lynch Bond Fund, DSP Merrill Lynch Liquidity Fund, DSP Merrill Lynch Government Securities Fund, DSP Merrill Lynch Balanced Fund, DSP Merrill Lynch Technology.com Fund, DSP Merrill Lynch Opportunities Fund.

DSP Merrill board in January approved the decision to buyback the company's shares and approved its delisting from the Bombay Stock Exchange. BSE listing norms require that at least 10 per cent of the share capital be held by non-promoters or else the company has to buyback its shares and get delisted.

In the case of DSP Merrill, non-promoters hold only a 2.27 per cent stake (mutual funds hold 0.03 per cent, private corporate bodies hold 0.02 per cent and the Indian public holds 2.22 per cent). The company has announced a buyback of its shares at a price of Rs 250.

Prior to its association with Merrill Lynch, DSP ML was known as DSP Financial Consultants Limited (DSP), an investment bank and securities house.

Founded in 1975, DSP Financial Consultants Ltd was promoted by the Kothari family of DS Purbhoodas and Company, a stock broker and foreign exchange dealer.

DS Purbhoodas and Company, one of the oldest broking houses in the country, was also one of the founding members of the BSE.

Merrill Lynch is a leading financial management and advisory company with offices in 44 countries and total client assets of more than $1.6 trillion.

As an investment bank, it is the top global underwriter of debt and equity securities and a leading strategic advisor to corporations, governments, institutions, and individuals worldwide.

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