With the Bombay Sensex, India’s benchmark index, hitting new highs, it is perhaps not surprising that December saw India’s second largest ever equity deal and one of the biggest deals in Asia in 2005. Leading private sector bank ICICI Bank raised more than $1.5 billion from a local and American depositary share offering through Merrill Lynch and Morgan Stanley.
It is the prospect of more such big deals from India that presumably convinced Merrill Lynch to consolidate its Indian investment banking interests. In December Merrill announced that it had agreed to spend up to $500 million to increase its ownership of local investment banking and wealth management venture DSP Merrill Lynch. Merrill Lynch will purchase up to 90% of DSP Merrill Lynch, subject to acceptances from public shareholders, with most of the extra stock coming from existing joint venture partner Hemendra Kothari. Merrill’s existing 40%-controlled asset management joint venture with Kothari will remain unaffected by the deal.