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Oct 22, 2012, 02.16 PM IST
Indians are more bearish on India than foreign investors, says Manish Chokhani, MD and CEO, Axis Capital, which was earlier Enam Securities. In an interview with CNBC-TV18, Chokhani says there has been a significant improvement in interest towards India from foreign investors.
Indians are more bearish on India than foreign investors, says Manish Chokhani, MD and CEO, Axis Capital , which was earlier Enam Securities. In an interview with CNBC-TV18, Chokhani says there has been a significant improvement in interest towards India from foreign investors. He said there was huge pent-up demand in the system, and the key challenge for now was access to capital. And while Indian shares have been among the best performers globally so far this year, Chokhani is hesitant to call it a bull market.
"Fundamentals need to improve further for the market to rally from hereon," he said, referring to weak GDP and industrial output numbers, and rising inflation. Chokhani is hopeful that the sentiment among retail investors will perk up if a few divestment issues are successful.
On the integration of Enam with Axis Bank , Chokhani said the two firms had been working closely for the last couple of years since the time the deal was signed in November 2010. The deal was an all stock transaction and it took nearly 20 months for all the approvals to be in place. With this acquisition, Axis Bank will now strengthen its presence in equities trading and investment banking.
Below is the edited transcript of the interview.
Q: What can you get out of this entity because you have been traditionally very strong in fixed income; of course banking but how big is the equity piece going to be for you?
Srinivasan: We are very excited with the Axis Capital starting operations today. We are very strong corporate banking franchise and what this addition of investment banking does to us is to complete the suite of products we offer to our customers. Our objective would be to offer entire corporate investment franchise to our clients seamlessly to make sure it adds value to them as well as to us.
Q: It has been long wait to get rebranded, but do you think the wait has been worth the while because you Axis Capital is starting off at a point when mood seems distinctly more upbeat than it has been for the last couple of years for equities?
Chokhani: That’s right. We used the last two years to get to know each other better, work closely together and each time you ask me I kept saying we are putting the nuts and bolts together, which is why I was not accepting any invitation to come on television. Thankfully, we have used this time very productively.
Instead of thinking ourselves as just adding a small piece to the bank we are happy to see and work very closely together to see how we can add value to the entire 100 percent of the bank just because of the sheer excess and insights that we bring with us about corporate.
So, we are very excited about it. The teams have been already working from Axis House for the last couple of months. In a sense, the integration is already done, it’s just the name change is today and we are hitting the ground running and very upbeat.
Q: Is there a lot of synergy, does it help for an equity house to have a bank at the backend? Can you actually leverage your corporate relationships on the investment banking front?
Srinivasan: If you look at globally, if one looks at the trends over the last few years, one would see that standalone investments banks are having a tough time. The global investment banks were the strong corporate banking financing are the ones who are succeeding and getting market share.
I don’t think so it is going to be any different in the Indian market; having strong corporate banking franchise is something which is going to help us in terms of leveraging what the investment bank can do.
What they bring is not just investment banking franchise, but their insight in terms of capturing more value from the client right upfront. They get into the minds of the clients and much ahead of possibly a corporate bank would do. Therefore, their ability to capture the entire lifecycle of products with client is possibly much more. That is what they will deliver to the bank and not just the investment banking products.
Q: How is the landscape looking to you, the entire investment banking and equity landscape? Do you think we have hit a trough and things are slowly on the mend over the next year or so?
Chokhani: From a market’s perspective yes, we spoke briefly of course offline. Sometime in June when I thought we had made a bottom in the market. From a competition standpoint, it’s a very interesting time. The world of investment banking and equity brokerage globally is going through a big churn. We are seeing people retrenching, people in the global markets and that’s affecting people over here locally and creating lot of uncertainty.
So, we are getting that window to go in. Second, clients over here are seeing a lot of change and churn in people who use to service especially from the global banks. They are looking for stable partners especially as the European banks have been offsetting their forex loans into Indian banks, the American have been cutting back and so on.
It is playing into the strength of Indian houses. It is coinciding wonderfully well with the bottom we are hitting in the economy as well as in the markets. We are very excited about the opportunity. We think we have the potential to be a powerful force in the country.
We can go completely end to end with clients where you are not just offering debt products and equity products, but actually going all the way through into the retail side as well selling in retail products into the corporate themselves. It is a fabulous play.
For me, it has been tremendously exciting to see how many more things we can do with the same person rather than just going with a very narrow focus of saying we can do a typical transaction for you. Therefore, the basis of competition in a sense has changed when we are dealing with clients now.
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