Market opportunities see off last of the international-Indian partnerships. An era is coming to an end in the Indian financial-service industry. Big-name international firms are unraveling joint ventures with home-grown players in an effort to capture bigger shares of the country's growing investment-banking, retail-security and wealth-management segments for themselves.

Case in point: Mumbai-based JM Morgan Stanley, an eight-year-old joint venture between JM Financial and Morgan Stanley encompassing investment banking, asset management, research, investment consulting and investment-product distribution and the last such grouping of any size, is being dissolved.

Time's up

JM Financial will pay $20 million for Morgan Stanley's stake in the investment banking, fixed income, and retail operations of the joint venture. Morgan Stanley, meanwhile, will fork over $445 million for the institutional equities sales, trading, and research parts of the joint venture -- to which it will add its own investment management and real-estate lending businesses. The Wall Street giant plans to carve out new Indian-market investment-banking, capital-market, fixed-income and wealth-management businesses.

"It is now the right time for Morgan Stanley to develop a wholly owned full-service India platform," says Morgan Stanley Asia CEO Hans Schuettler. "This investment demonstrates our commitment and confidence in India, the growth of the market and the fast changing needs of our clients."

A joint venture between DSP and Merrill Lynch split up in 2005 when Merrill paid $500 million to increase its 40% stake in the Mumbai-based brokerage to 90%. A joint venture between Indian businessman Uday Kotak and Goldman Sachs dissolved in March 2006.

Morgan Stanley's decision is a pointer to the changing landscape of investment banking in India, where foreign firms feel that they have achieved enough critical mass to warrant 100% ownership.

Additionally, the Indian economy has expanded significantly in the past few years and Indian clients have begun to demand more sophisticated financial products and services. As a result, international investment banks and brokerages see opportunities to go it alone without branding and guidance from indigenous partners. -FWR

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