It's headhunting time in India for foreign broking houses. Big names such as Lehman Brothers, Bear Stearns, Credit Suisse and Australia's Macquarie Securities have started scouting for talent to start their Indian operations.
While Macquarie Securities has roped in Varun Bajpai of Deutsche Bank to head its investment banking division, Lehman Brothers, which is set to start its second innings in India, is scouting for a research director for its Indian operations. Lehman has already placed an advertisement is a leading daily asking for a research director.
Credit Suisse, which is currently serving a three-year ban by the Securities and Exchange Board of India and is planning to restart operations in India in six to eight months once the regulatory formalities are through, is also looking for senior staff for its Indian arm.
Bear Stearns, the seventh-largest securities firm in the US in terms of total capital, is another one to scout for Indian talent. According to its website, the company processes around 7 per cent of the daily traded volume on the New York Stock Exchange.
Meanwhile, Lehman Brothers, which was earlier talking to various domestic broking firms for a joint venture, is now believed to have decided to start Indian markets on its own. BNP Paribas Securities is also looking for a re-entry into Indian markets.
Industry sources said that the French entity is currently in talks with a couple of domestic firms for a possible joint venture.
Macquarie Securities, part of the Macquarie group of Australia, is managing assets of close to $63 billion. It has already set up an office in India and bought the card of ING Baring by virtue of its global takeover of ING's Asian equities businesses last year.
A major driver for foreign brokerages setting up shop in India is the increase in registration by foreign institutional investors. The brokerages would like to serve their existing clients in other countries.
Besides, foreign clients were comfortable with their existing brokers and are willing to work in tandem with them to structure the required portfolio, said an executive at a foreign broking firm.
Some of the foreign brokerages have explored the possibility of floating joint ventures but the "unfriendly tax structure" has discouraged them from going in for this kind of an arrangement, the sources said.
The managing director of a leading Mumbai-based domestic broking firm, who was engaged in talks with one of these firms for a possible joint venture, said: "While there are foreign firms that are keen to set up offices and grow either organically or inorganically, there are very few opportunities available.
"The present regulatory norms discourage mergers among the domestic players as the issue of turnover tax is still not resolved."
